The public will be given the power to veto excessive council tax rises, Local Government Secretary, Eric Pickles, announced today.
Council tax bills across England have doubled since 1997, pushing the average bill to £120 a month on a Band D home. The police authority levy imposed on council tax has trebled since 1997.
The new Government has already committed to help councils to freeze council tax. In parallel, steps are now being taken to help prevent bills skyrocketing down the line by giving local people the final say in a vote on excessive increases. This will replace top-down council tax capping by Whitehall, which gave no choice to local residents.
Under the new proposals laid out in a technical consultation today, any council that set its council tax increase above a set ceiling, approved in a democratic and transparent manner by Parliament each year, would trigger an automatic referendum of all registered electors in their area.
Residents would be asked to choose between the proposed rise and a ‘shadow budget’, which the council must also prepare within the defined limit. A no vote would leave councils having to refund taxpayers or give a credit at the end of the tax year.
The previous Government stepped in to take capping action against 36 authorities which set excessive rises. Some of the highest rises were South Cambridgeshire who tried to set a 100 per cent increase in 2005-06 and Lincolnshire Police Authority a 79 per cent increase in 2008-09.
The Secretary of State is determined to reverse the presumption that Whitehall knows best by making local councils directly accountable to the local taxpayer. Today’s proposals would mean councils have to defend their budget decisions and bill increases to the local electorate instead of Whitehall.
Eric Pickles said:
Hardworking families and pensioners were left feeling powerless and frustrated in the past thirteen years, as council tax bills doubled while their frontline services like weekly bin collections were halved.
If councils want to increase council tax further, they will have to prove the case to the electorate. Let the people decide.
The new Government is committed to a review of local government resource, but such reforms must go hand in hand with measures to protect the interests of local taxpayers.
This is a radical extension of direct democracy, as part of a wider programme of decentralising power to local communities. Power should not just be given to councils, but be devolved further down to neighbourhoods and citizens.
Notes to editors
Council tax bills hit £1,439 on Band D in England in 2010-11. By contrast, council tax was £688 in 1997-98. This means council tax in this period has risen 109 per cent - or an extra £751 a year on a Band D home. Since all other Bands are set as a percentage of Band D, every type of home has seen their bill double. The average police precept on council tax in England has trebled from £54 on Band D in 1997-98 to £161 in 2010-11. Average council tax and percentage change 1993-94 to 2010-11: www.communities.gov.uk/documents/statistics/xls/1518299.xls.
The new proposals will ensure that councils know where they stand, as they will know in advance what the threshold is that will trigger a referendum. Under the capping regime, they were not told of capping limits until after they set their council tax increases. This threshold will be approved democratically and transparently by Parliament. Council tax referendums will replace the old regime of Whitehall capping. Ministers have written to the Welsh Assembly Government offering to extend the powers to the Welsh Assembly to offer similar protections and rights for council tax payers in Wales.
The technical consultation includes measures to tackle de minimis increases, for example by parish councils, options to avoid expensive re-billing, and the mechanism by which a referendum would take place. Primary legislation is required to change the law. The right of veto is expected to be in place for council tax bills issued in March 2012.
The full consultation can be found at: www.communities.gov.uk/publications/localgovernment/vetocounciltaxincreasesconsult.
Keep up to date with the Department by following us on Twitter (external link).
Visit our newsroom contacts page for media enquiry contact details.