Magazine article Public Finance

Labour Adds Council Tax Reform to Agenda

Magazine article Public Finance

Labour Adds Council Tax Reform to Agenda

Article excerpt

Labour will consider reforms to council tax as part of its commission on town hall finances, shadow local government minister Andy Sawford has revealed.

In an exclusive interview, Sawford told Public Finance that any local authority ideas for raising money through the changes to the tax base, such as banding, would be examined ahead of the next election.

As part of Labour's local government innovation taskforce, launched last September, Sawford is undertaking a review of council finances, looking at revenues and Whitehall funding alongside public service reforms.

'There are issues around the council tax base in terms of the number of houses in different bands and the nature of the banding system,' he said.

We are not proposing, at this stage, a different broad local tax. But what we are saying is that council tax - historically a way that local authorities could themselves determine a particular revenue stream - clearly became very difficult over time because it was going up and up.'

Although it would be 'wrong at a time when people are feeling stretched to put council tax up', there could be reforms.

'There has got to be some change if we are not to see the poorest people in the country particularly impacted by the cuts, in terms of the loss of very significant services to them,' he said.

For example, Sawford said, there had been above-average government cuts in 29 of the 30 communities with the highest black and minority ethnic populations. These included eight where cuts had been at double the national average

Councils should come forward with suggestions to the commission, which would be considered as part of Labour's work to ensure local needs are reflected in future settlements, he said.

This was something Sawford claimed the coalition had abandoned after its own finance changes.

What the government has done has clearly reduced the extent to which deprivation is reflected in the final settlement,' he said.

'This recent experiment has been the departure from an accepted needs-based approach to local government finance, so we would be about putting that back at the heart of the financial settlement.'

As part of Labour's focus on fairness, the coalition's flagship local government finance changes - part-localisation of business rate growth to town halls and the New Homes Bonus - would also be up for review. …

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