Council Tax Campaign

The Campaign For A Fairer Council Tax

Local Government White Paper

On 11th December 2001 the Government launched a Local Government White Paper Strong Local Leadership – Quality Public Services. It set out government policy in the light of responses to the 2000 Local Government Finance Green Paper.

Policy Announcements – The Context for the Council Tax Reform Debate

The paper set out a series of policy decisions relating to Council Tax and local revenue raising. These announcements did not focus on improving the fairness of the tax. Instead they form the context for future debate on making Council Tax more equitable.

Policy Announcements in the White Paper

The 2005-2007 revaluation and the fixed ten-year valuation cycle first announced in Summer 2001 are confirmed; the ‘revenue neutrality’ of the revaluation is also confirmed.

Revaluation will be accompanied by a transitional relief scheme (‘gainers’ will contribute towards compensating ‘losers’).

Whatever else happens, existing bands will be changed in some way to reflect changes in property prices (the White Paper uses example band limits about 70% higher than existing ones).

Councils will have some flexibility in setting Council Tax discounts (with powers to both remove and introduce some discounts).

The Government plans to introduce moderate revenue raising reforms to bolster local autonomy. There will be general powers to charge for discretionary services, retain income from fines and trade in services where the local authority has a strong record.

In addition, the Government set up a working group chaired by Nick Raynsford to consider the long-term balance between local revenue raising and central government grants. Meanwhile the Government promises to reduce the level of earmarked grants, to give councils more control over how they allocate their resources.

The White Paper and Council Tax Reform

Without announcing any decisions, the White Paper discusses the arguments about the unfairness of Council Tax, highlighted by the Centre for Council Tax Reform. The paper states that the Government is aware of the concerns about unfairness and will consider options for improvement. But it also points out that there is a risk that improving the overall progressivity of the tax could hit households with low incomes but high home values (e.g. some pensioners and tenants and key workers in property hot-spots).

Two specific commitments are made:

The Government will listen to the views of councils and taxpayers as it makes decisions about bands and related issues over the next few years.

Legislation will be introduced to clarify that new bands can be added by secondary legislation, giving the Government the flexibility to reform Council Tax as it wants (at present legal opinion is divided as to whether the number of bands can be changed without statute)

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