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How Central Government is Pushing up Council Tax (and how they deny it)

Only some of the money that councils have to spend comes from Council Tax. The rest is doled out by Central Government. Central Government (the Offfice of the Deputy Prime Minister (ODPM)) have a set of formulas which they use to determine how much cash each council gets. Part of these forumla is an assumption about how much money will be raised in council tax by the council: The more money a council raises itself the less it needs from ODPM. This is designed to even things out between rich and poorer areas. The table below shows how ODPM's assumptions about the amount raised in council tax by councils has been rising above the rate of inflation for each year since 1994/1995 apart from 2004/2005.

This means that if a council wishes to maintain the same income in real terms over two years it will have to increase council tax: it will be recieving less from central government. Council Tax has to rise in order for the council's spending to stand still.

Assumed Band D Council Tax values

YearRPI .Relative Diference (%) .ANCT .Increase (%) .CTSS .Increase(%) .RNF .Increase (%) .

ANCT : Assumed National Council Tax before floors and ceilings calculations
CTSS: Council Tax at Standard Spending
RNF: derived from the Relative Needs Factor
RPI: Retail Price Index. A measure of inflation.
Relative Difference: The increase in ODPM assumption minus inflation (RPI)
*: The large change between 2002/2003 and 2003/2004 was due to the effect of Resource Equalisation, which aligned the CTSS (renamed ANCT) more closely with actual local authority Council Tax values. A notional figure for ANCT in 2002/2003 was calculated by ODPM (by assuming the Resource Equalisation had happened a year earlier) to show the trend without the effect of Resource Equalisation.

The relationship between council tax rises and ODPMs assumptions regarding ANCT, CTSS and RNF is denied by Phil Woolas, the Minister responsible. Please follow the link.


Stephen Booth said…
I thought it was councillors recarpeting their offices with insanely expensive carpet that was pushing up my council tax?
PoliticalHack said…
We are blessed that in Birmingham, a council tax rise of just 1.9% was pushed through by the Lib Dems and the Tories.

Of course, that means that they have had to cut services. But you can't have everything.
john said…
There should be no front line service cuts although some Labour districts have gone for such. On a citywide basis Labour proposed a small cut in spending compared to the partnership in any event.

The increase in council tax generally has a local element and a national element.
TonyF said…
Or is it Councillors voting themselves pay rises that they don't earn?

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