Council tax increase ‘wouldn’t touch the sides’ of deficit say authorities

Extra income that could be raised through council tax rises will be barely enough to even pay for the extra amount needed to pay for bin lorry fuel, two Essex council leaders warn.

The stark warning from two neighbouring authorities in Brentwood and Chelmsford comes after the Government announced it would be allowing councils to local authorities such as Chelmsford to increase council tax by as much as three per cent – up from two per cent.

For those councils providing social care the maximum uplift allowed t has been increased to five per cent.

But for Chelmsford City Council extra per cent would bring in around another £170,000, its leader Councillor Stephen Robinson said. If it chooses to increase its share of council tax next April by three per cent, it would bring in an additional £500,000.

An extra one per cent uplift for Brentwood would bring in about £125,000. Fuel costs for bin lorries in Brentwood alone have gone up by £400.000.

But it costing the authority an extra £480,000 this year to just heat the swimming pools at Riverside and South Woodham Ferrers – double the amount from last year – and it is costing an extra £300,000 to put diesel in bin lorries due to rising fuel costs.

Cllr Robinson said it could be facing having pay an extra £60,000 a week for rising fuel costs from April – more than an additional £3million for the year.

He added it was more important to get clarity over what grant support the council would be receiving given council tax only makes up a fraction of the total budget – this year 22/23 council tax generated £14.6m compared to an overall budget of £56m.

He said: “An announcement just on council is not very helpful. It does not give us the whole picture. The last couple of the Government have used the phrase core spending power – that we are maintaining in the core spending power of local government.

“But that is only true if councils put up their council tax – so basically for the last few years they have not really given councils a choice. They have to put up their council tax by the max or their net funding goes down.

“This is why councils have had to work really hard to generate additional income. Pre COVID parking brought in £8m. This year we are budgeting for £6m but it is going to be nearer £5m. Just on parking there is a shortfall of £1m which is significantly more than any rise on council tax.”

Chelmsford City Council has says it will face significant savings – including in its workforce – as it faces rocketing costs.

The council’s cabinet heard on October 18 that its financial position has worsened since a July forecast, largely from prolonged levels of very high inflation and has warned its expenditure could exceed its income by £2.5m in the current year.

Its projected deficit for 2023/24 has now risen to £7.9m, from an estimate of £4.2m in the summer. The council has said it may have to look at its workforce which accounts for two thirds of its expenditure.

Fees and charges – which could including parking – may have to rise as it seeks to balance a budget for next year.

Councillor Chris Davidson, cabinet member for fairer Chelmsford said interest rate rises are making investment projects more expensive.

He added: “Pay award, parking and fuel rises are contributing to a overspend this year of £1.2m. Next year we are looking at a £8m shortfall if you carry forward those inflationary figures. This is why we are looking at other way of generating income and reducing expenditure.

“We in Chelmsford are relatively more financially secure than other councils, but we are working with our neighbours in Essex to get a handle so we all understand the situation. Councils have a cost of living crisis and energy bills are affecting councils. That is why we have to look at savings in other ways.”

Leader of Brentwood Borough Council Chris Hossack said: “The extra council tax does not bridge the deficit in any way. You are caught in the middle. Residents are under pressure council are under pressure and you have to make choices what you want to do.

“But the choice does not fix the problem, all I think the onus has been put back on the councils. It hasn’t really touched the sides. A decision will be made shortly about whether the council will be taking up the offer.”

He added: “The government seriously needs to look at the way local authorities are financed. The issue is we can probably all get through it this year but next year is to going to bring an even tougher conversation. We will balance this budget but it because just harder and harder.

“After that what is the point of local councils? Do you go back to the very basics and just become a collective authority – to collect your tax and collect your rubbish? Councils want to do more than that.”

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Piers Meyler

Local Democracy Reporter