Raising council tax: Where there’s goodwill there’s a way

The cap for triggering council tax referendums must now yield to popular consent to pay more in local charges to improve local services, writes Localis chief executive Jonathan Werran

Keen followers of the political scene may remember the time before Brexit, when the heights of political excitement were predicting how and when George Osborne would pull the levers of patronage to attain the long-term plan he could commit to, that of becoming prime minister.

One failed referendum and one bold career move into local newspapers later, Osborne’s idea of reducing the sauce of annual public expenditure to the 35% state has been overtaken by a slump in economic growth and unexpected government spending. The extra £20bn uncosted funding for the NHS which foreign secretary Jeremy Hunt wrung from Philip Hammond consign this to the great dustbin of fiscal dreams.

But against this challenging backdrop of further tax rises and spending consraints, is there a public will to pay above and beyond the minimum expected? Affirmative is the answer from Localis’s new report, Monetising Goodwill, which found the majority of people would in any case — and regardless of where they live or how they voted — be willing to pay more in council tax or voluntary one-off levies to better fund local services.

For example, people living in the East Midlands — the region most keen to pay extra tax — show a marked preference to pay for better roads and repair potholes. Support for homeless people and faster wi-fi speeds would get the Yorkshire pound. South East residents are keener to funnel extra money to the police than elsewhere, and people living in the North East regard dog fouling as a bigger menace than others.

The sheer diversity of perspectives unearthed from our extensive YouGov polling strongly urges the case that local wants and needs should be reflected in local tax systems.

Following this local pattern of preference, local authorities should use their existing council tax platform to give citizens the opportunity to direct new and existing funding in line with their priorities. This could mean enabling residents to direct up to 20% of total revenue raised to specific services and for achieving certain outcomes.

And following Westminster City Council’s lead, authorities could include the voluntary option to pay higher funding directed to specific services and issues, on top of the core bill — albeit limiting the number of issues to pay for.

This agenda isn’t about raising ever higher taxes and increasing the power of the local state. It does not pretend to be a remedy for the sustainability of local government finances. It is, rather, a creative opportunity to renew and re-cement civic bonds.

To this end, Localis proposes any extra funds raised by voluntary levies should be allocated to community groups for the purpose of delivering local services. Community-led organisations can be entrepreneurial and creative with a vested interest in a way that a council cannot. They are also more likely to attract a higher level of public support for higher contributions raised through hypothecated local taxation.

There is though a rather obvious barrier to be lifted — the referendum cap for triggering council tax votes. During the early years of the coalition, while money from the Treasury could fund a council tax freeze, the imposition of 2% referendum triggers made perfect policy sense. As a solid slug of retail politics, it displayed as good a sensitivity to the cost of living agenda as one could wish to see.

But now the freeze money has melted away into the slush of stop-gap social care funding fixes, this forlorn legacy lovechild of Osborne and Pickles must be sent packing. It’s time for centrally imposed caps on council tax charges to end and for the abolition of referendum triggers enshrined in the Localism Act.

Failing abolition, James Brokenshire as secretary of state for housing, communities and local government, should at least set council tax referendum thresholds at a rate that enables places to set hypothecated taxes and levies more freely.

Like the social care precept, the secretary of state should stipulate that greater freedoms are used specifically for hypothecated taxes and levied and for services and issues that reflect public will. And to that end, local people must be given the right to choose and vote on local spending priorities.

Jonathan Werran is interim chief executive, Localis