Shadow chancellor George Osborne claims his party will freeze council tax for two years if the Tories win the next election. That sounds good to most voters as council tax is unpopular. Osborne hopes to use the announcement to position his party as efficient and Labour as wasteful. That’s something we must not let him get away with because it’s not true.
Osborne is offering councils a carrot to keep council tax down. If planned spending increases are kept down to 2.5 per cent, he claims a future Tory government would grant-fund the difference so tax-payers wouldn’t have to pay it. That begs two questions. First, how would councils keep planned spending so low when demand for services like adult care and housing is growing? And second, where would he find the money to give to councils?
On the first question, Osborne points to efficiency savings. But last year, Tory councils put up council tax on average more than Labour councils did. If there are easy efficiency savings to be found, why aren’t Osborne’s Tory councillors finding them? Over recent years, thanks to the Gershon efficiency regime introduced by the Labour government, local government has generated £20 billion in savings. The Audit Commission recognises that local government is already the most efficient part of government. So forcing councils to make further unplanned savings will, in many cases, mean service cuts. That means reducing support for vulnerable older people, cutting police teams, and taking youth services away from young people.
Councils, elected by local people, negotiate a balance between levels of taxation and service provision. Most of our income comes from national government in the form of a grant, but marginal spending is determined by council-tax levels set by local councillors who are accountable for their decisions to voters at election time. The Tories claim to support this model, but they keep making statements that show their true nature is centralising and anti-localist.
In my own borough, we had the worst of both worlds while the Tories were in coalition with the Lib Dems for four years until 2006. They put council tax up 40 per cent and cut services at the same time. They achieved this extraordinary feat by failing to focus on efficiency and value for money. Every time they let spending run out of control, they raided council-tax payers’ bank accounts to pay for it. I suspect Osborne views Lambeth’s Tories as mavericks, but the point that Tory councils nationally increased tax more than Labour councils last year does imply he needs to look harder at what his own councillors are doing wrong. Perhaps that’s why he wants to centralise decision-making on their behalf?
On the other side of Osborne’s equation, assuming councils make the cuts he longs to see, where would the Tories find the money to subsidise council tax? The cost could run into billions if enough councils take up his offer. That’s more than could be found by cutting out ‘consultants and advertising’ in the way Osborne claims. He needs to detail exactly what would be cut, and where, if we are to believe him. A man with pretensions to run this country’s economy should be pressed on the detail before being allowed to get away with such easy pronouncements.
Sensible Labour-led councils are already at the forefront of finding real efficiency savings. Labour-controlled Hackney has already frozen council tax for three years running. The two fastest-improving councils in the country are Labour-run Lambeth and Stoke-on-Trent. In London, Labour-led Waltham Forest just moved up to a four-star rating, hot on the heels of Labour-run Tower Hamlets. The two worst performing councils left in London are both Conservative. We don’t need any Tory politicians to tell us to become more efficient. Labour councils are already doing it.
With the credit crunch hitting families across the country, Labour councils know we have to do all we can to protect low and middle-income working families who are most vulnerable to the downturn. That’s why we’re working hard to keep council tax rises down. But we’re also working hard to generate the efficiency savings that give us more to spend on frontline services people rely on as times get tough. There is no need for us to cede the territory of high efficiency and fair tax to the Tories.
At a time of increased economic pressure on families and communities, the Tory recourse to cuts at all costs is the surest way to make sure the weakest are hit hardest. That’s what Tories always do. We shouldn’t be the least surprised that Cameron’s Tories are planning to do the same.