Surrey’s cancelled referendum: good for Surrey, no change for everyone else
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Surrey CC council chamber. Photo: Surrey CC, Flickr.
Surrey County Council has cancelled its referendum on a 15% hike in council tax aimed at paying for social care. The reason will see Surrey benefit but will leave other authorities asking how their funding issues will be solved.
It’s off. The referendum that would have seen the residents of Surrey vote on a 15% hike in council tax will not go ahead.
Announced in January, every local government officer up and down the country had been watching what would happen when council tax payers were asked to back a hefty rise in taxes for a council beset by social care funding issues. But after a tense meeting of Surrey County Council on Tuesday evening this week the referendum will now not happen.
The circumstances prompted an angry response from Labour party leader Jeremy Corbyn who demanded to know which “sweeteners” had been offered to Surrey’s Tory-led council. Text messages had allegedly gone astray, handing the Labour leader a rare opportunity to seize the initiative at PMQs.
Questions about why the referendum was killed were understandable. Reports said that Surrey’s council leader, David Hodge, withdrew his referendum proposal after delaying the council meeting for three hours while “negotiating” on the phone with Whitehall.
Hodge has also been quoted in the Financial Times saying “The government has listened and we believe the government now understands,” and that by next year the finance position would be quite different. The implication was that something big was on its way, enough to make the council leader change his mind. However, he remained tight lipped about what it was.
David Hodge. Photo: Surrey CC, Flickr
Later we received some further insight. The suggestion from a think tank, the Local Government Information Unit (LGiU), on the BBC’s Today programme, was that Surrey will be included in business rates devolution trials due to kick off in April, well ahead of the 2020 start date for a nation wide launch.
That’s a boon for Surrey. The county council, pained by a £170m drop in grant money since 2010, will now opt for a 4.99% rise in council tax — a figure much below its referendum target — safe in the knowledge that cash is coming early from rates devolution.
It’s debatable whether Surrey’s leaders ever really expected its residents to back a 15% rise in council tax. Many interpreted the move as an effort to focus central government’s attention on social care funding. Others read referendums as a way of preparing the ground for councils to rebel against balanced budgets, an act that would force central government into action.
But opinion was split over who stood to gain or lose. Some saw central government benefiting: a win would work out well, tax payers would be taking responsibility; a loss would indicate a lack of appetite for increased spending and current government policy would be in the clear.
In the end the government emerges from the episode without a winner’s rosette. The last minute efforts appear to indicate a desperate effort to avoid a referendum. Many believe this is because Jeremy Hunt, the health secretary, has his constituency in Surrey and could not risk having the referendum turn into a vote on his efforts to make the health service work in tandem with social care.
A slide from the Surrey CC press office. Photo: Surrey CC, Flickr
What we do know is that Surrey’s action has worked — for Surrey. The brinkmanship involved has won the county an important funding reprieve.
But dodging the referendum will provide little comfort to other local authorities up and down the country battling to pay for social care now. It will also provide little reassurance to those authorities who do not expect business rates devolution to be their saviour come 2020, and are still unclear how the new system will work.
As the LGiU said in a blog at the end of last month: “Although in principle this new system could offer a greater degree of fiscal freedom, areas with a low business rate intake are justifiably concerned about how the redistribution element will work after the Revenue Support Grant is fully phased out.”
The referendum didn’t just stand for Surrey’s finances. It symbolised local government finances as a whole. But Surrey’s settlement stands for a short-term fix. Local government finance officers across Britain will continue to wonder how the social care question will be resolved for them, if the government genuinely now understands the position local authorities are in. .
