Funding shortfall sparks tax fear

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"Today's £5m inflation gap could be £6m in three years time"

Deputy council leader Maurice Heaster has warned that failing to reduce council spending in line with falling government grants would be equivalent to an annual council tax increase of around 12 per cent.

Speaking after last night's council meeting he said that the £5m gap caused by this year's below-inflation settlement would grow in future years if action was not taken to reduce the size of the council's budget.

The council received the lowest possible grant increase this year of 2.7 per cent. Inflation is currently running at 4.4 per cent - its highest level for
15 years.

Cllr Heaster explained that inflation-busting council tax rises were not the
answer:

"This is not a one-off problem. All the signs are that the Government will squeeze councils' funding still further in the future. Today's £5m inflation gap could be £6m in three years time.

"It is easy to say the council tax payer should pay more. This would not be fair. The Government is already short-changing local people by its policy of switching funding away from London. It is a challenge finding annual savings of £5m or more - but without reducing spending these would be equivalent to a tax hike of 12 per cent in future years.

"Rises on this scale would be totally unacceptable. Local residents, especially the elderly and those on low incomes, expect their council to do everything in its power to keep their council tax at an affordable level.

"By failing to control inflation and by squeezing public spending the Government is forcing cuts on councils. It is the same national funding crisis that is driving the closure by the local NHS of Bolingbroke Hospital and the withdrawal of school nurses.

"We believe we have set our spending at the right levels needed to maintain current services. If through no fault of our own we find we are £5 million out of pocket the only sensible response is to review that spending and see where savings can be made.

"This is the only way to safeguard the essential services on which the most vulnerable members of our community depend.

"We will not punish the tax payer for the failures of the Government to properly fund local services. We have to face up to the long term picture and take the action now that will prevent even bigger problems in future years."

February 1, 2007