Will Thurrock residents be paying for 0% council tax increase?

Thurrock Council Offices

ON TUESDAY, excitable young Thurrock Tories boasted on their social media channels that they will be recommending a 0% council tax rise at the next Wednesday’s meeting of Thurrock Council’s Cabinet.

Deputy leader of Thurrock Council, cllr Shane Hebb said “It will leave more cash in people’s pockets” whilst the portfolio holder for health and education, cllr James Halden, stated: “That’s right, 0%! That’s even while investing more cash in police and ASB, weekly bin collections, school places and so on. Long term economic plan working!

However, a closer look at the actual item on the agenda, may show a certain divergence of opinion, that is to say, are the council’s finance officers, the ones with decades of experience in fiscal management, advising something differently? Do they have both eyes on the financial stability of Thurrock Council as opposed to (perhaps) a small number of Thurrock Conservative councillors, who are up for re-election in May?

The report states:

The Medium Term Financial Settlement (MTFS) presented to Cabinet on 12 December 2018 showed a balanced budget for part way into the forthcoming decade, based on a number of assumptions that, when delivered, puts Thurrock Council in a stronger position than most for the challenges ahead when the Revenue Support Grant discontinues and to meet the challenges of Business rates Retention that may bring less certainty to council funding over the medium term.

These assumptions are based on driving cost reductions through reducing staff costs, improved procurement, efficiencies through changing the ways the council works such as utilising digital channels and income generation through council tax, fees and charges and investments.

A key change to the MTFS considered on 12 December 2018 is the decision to recommend a zero percentage council tax increase for 2019/20 that reduces income by £2.1m in that and subsequent years.

The board has a savings target of £0.902m in 2019/20 which is to be delivered following the implementation of the following review outcomes:
Children’s Social Care – £0.797m; Transport – £0.060m; and Planning – £0.063m.

Cabinet will be aware that Thurrock Council has the lowest council tax in Essex and one of the lowest of all Unitary authorities throughout the country. Whilst there is no desire or need to change this position, officers’ advice is clear that council tax increases are required and this is echoed in the Director of Finance’s s25 Statement in recent years.

The assumptions at the start of the municipal year within the MTFS was a 2.99% council tax increase in 2019/20 (4.98% in 2018/19) and 1.99% thereafter.

Councillors have considered the following:

4.3.1 Advice from CIPFA is clear that investments should not solely be used to replace existing funding streams but for additionality;

4.3.2 The Comprehensive Spending Review that will be carried out by the government next year will assume that the council has increased council tax by allowable levels and so the amount the council can retain from its business rates will be reduced accordingly – the government will not replace any income foregone;

4.3.3 Whilst the Adult Social Care precept was welcome to provide much needed funding, the amount raised was reduced compared to the majority of other top tier authorities due to the low council tax base. It appears clear that additional precepts may well become part of local government funding going forward;

4.3.4 Following the above, it is still unclear how local government will be funded going forward. One aspect that is clear though is the direction of travel across the UK is for councils to rely on locally raised taxation; and

4.3.5 As other grants, such as public health, become part of mainstream funding councils will see a switch of statutory services currently being funded centrally needing to be funded locally.

4.4 Having considered the advice as set out above, the Cabinet has chosen to recommend a zero percentage council tax increase and figures have been amended accordingly.

At the end of the report, Thurrock Council’s director of finance, Sean Clark states:

“Whilst this draft budget report sets a balanced budget, it does not include a council tax increase and so reduces the council’s ability to maximise council tax streams going forward in its aim to become financially self-sufficient. Each 1% is circa £0.7m that is then lost to the income stream for perpetuity at a time where the government has made clear that councils will need to finance services through local revenues from both council tax and business rates………”

The matter will be discussed on Wednesday January 16th at 7pm.

Full document is below.


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