Council Tax: Government’s Proposed Increase

Part of the debate – in the House of Commons at 4:25 pm on 25th January 2021.

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Photo of Brendan Clarke-Smith Brendan Clarke-Smith Conservative, Bassetlaw 4:25 pm, 25th January 2021

Today, we have heard arguments that the Government are forcing councils to increase council tax and that they have not adequately funded the costs associated with the covid-19 pandemic. The reality, however, is quite different, and the comprehensive spending measures taken have been set out clearly by the Secretary of State. Conservative councils on average also set the lowest band E council tax rates and, since 2010, we have ensured that council tax has fallen in real terms. That compares with the last Labour Government, when it doubled.

We know that councils face many challenges, but we also know that many decisions are taken locally and that taxpayers do not always get the value for money that they deserve. In my first real venture into politics, I spent many years as a councillor in the city of Nottingham, so I was very disappointed to hear of the scandal involving council-run Robin Hood Energy, a company that set out to help people struggling with their bills, but instead, failed to turn a profit and ended up losing millions and being closed down, leaving 230 workers redundant. Unlike the real Robin Hood, this one ended up taking people’s money and then losing it. While Alan Rickman’s sheriff famously suggested calling off Christmas, it is now the modern incarnation in the form of the Labour council that will see budget cuts of £15.6 million, the loss of 272 full-time jobs and numerous cuts in services.

At its peak, Robin Hood Energy supplied energy to 125,000 customers around the country, many of those through council-run partners. Its turnover went from £4.6 million in 2015-16 to nearly £100 million in 2018-19, but, in all but one year, that growth translated not into profit but into bigger losses. By March 2019, it was in the red by more than £34 million. Auditors Grant Thornton calculated that the council had invested a total of £43 million into the company and risked £16.5 million in guarantees. It said that the council had failed to act on warnings to manage their budgets and criticised the use of councillors on the boards of its companies without sector-specific knowledge, which it said led to huge debts. They now plan to sell off £100 million in assets to make up the shortfall and balance the books. In short, their coffers have had their hearts cut out with a spoon.

Compare this with Conservative-led Nottinghamshire County Council, which has managed its budget admirably. In my constituency, Labour-controlled Bassetlaw District Council has been given a great deal of Government support, with £54.2 million of funding in 2020-21, including an additional £2 million in covid-19 funding. In 2017, some councils in Nottinghamshire spent tens of thousands of pounds paying over and above the Government’s recommended rate for mileage. Notably, Bassetlaw paid the highest rate in the entire country—69p per mile—and, at the time, Her Majesty’s Revenue and Customs recommended only 45p per mile.

Other Nottinghamshire councils are no different with wasteful spending—for example, independent Ashfield District Council, which has created five extra cabinet positions and a political officer at a cost of £90,000, while increasing council tax. In Mansfield, the Labour-run executive Mayor’s office costs around £250,000 a year, and that is also entirely unnecessary.

This Government and Conservative-led councils have shown the way in terms of sound financial management and sustainable public finances. It is time the Opposition took note.