West Sussex County Council has frozen its element of council tax for the last six years but is proposing to agree a 3.95 per cent increase next month, equivalent to £45.90 for a Band D property, as it grapples with a steep reduction in funding from central Government.
New burdens on services, the introduction of a National Living Wage and a ‘harsher than expected’ settlement from Government made consideration of a council tax rise ‘unavoidable’, according to a draft report on the council’s financial position.
It is facing a total budget gap of £153.8m over the next four financial years, assuming that council tax remains at the same level.
Although on average local authorities across England have had their funding reduced by 12.5 per cent for 2016/17, West Sussex’s settlement was slashed by 20.2 per cent, something the council called a ‘fundamental change in approach and policy’, as in recent years the Government cut grants to councils by the same percentage.
As West Sussex has a greater ability to raise council tax due to a better than average tax base the Government is removing more funding from the county, assuming the shortfall can be made up by council tax rises, the report suggested.
Government funding to WSCC would fall by £31.7m in 2016/17, £24m in 2017/18, £13.4m in 2018/19 and £9.7m in 2019/20, indicative figures show.
In his Autumn Statement back in November, Chancellor George Osborne said he would allow councils to raise their precept by two per cent purely to fund adult social care, something WSCC looks set to take advantage of, even though it has stated this will not cover increased budget pressure on the department.
Meanwhile, under the proposals another 1.95 per cent will be added to the county council precept, below the two per cent threshold that would trigger a referendum.
In previous years the Government has given authorities a grant for freezing council tax, but this has been rolled into the general revenue support grant, which is being steadily reduced, ‘effectively withdrawing’ the freeze grant.
The county council is still awaiting further information on how reform of the business rates system will affect its financial position, and announcements on a number of specific grants such as public health have yet to be made.
Meanwhile the introduction of the National Living Wage is expected to add an extra £9m to the council’s budgets in 2016/17 and £30m over the four-year period.
Michael Brown, WSCC’s cabinet member for finance, resigned last month as he felt unable to announce a significant tax increase, while leader Louise Goldsmith warned that ‘very tough decisions’ would have to be made on council tax in the new year.
Mr Brown said: “I chose to stand down as a matter of political principle.
“As a low tax, low spend Tory, I felt unable, as cabinet member for finance who had frozen council tax for the five previous years, to stand up in our budget debate and announce a significant tax increase.
“Once local authorities get the taste for increasing tax, they find it really, really difficult to stop.”
This week Louise Goldsmith, leader of the council, said: ““This will be an extremely challenging year for us. Our Government grant has been cut by over 20 per cent – this is much worse than the national average and far more than we had expected.
“However our prudence in the past has paid off and we are able to use £11m of previous savings to help plug the budget shortfall while we continue to make the necessary savings next year.
“We are determined to protect the services that matter most to West Sussex residents - giving children the best start in life, boosting the West Sussex economy and helping people live independently for longer in later life.
“In order to do this we have no choice but to raise council tax for the first time in six years. Without this raise we would be facing severe cuts in critical frontline services.”
The draft revenue budget will be discussed by WSCC’s Cabinet on February 2, and the finalised 2016/17 budget will come before Full Council on February 19.
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