Public Services Management: This time it won't be quite so taxing: Andrew Evans assesses the arrival of the Government's replacement for its discredited 'community charge'

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The Independent Online
THREE years ago, on Saturday 31 March 1990, the introduction of the poll tax in England and Wales was greeted by mass demonstrations in London, culminating in the worse rioting the city had seen for decades.

No such scenes of violence are expected in Trafalgar Square today - the day the council tax officially replaces the discredited 'community charge' as local government's sole remaining method of local taxation. Much to the Government's relief, the new tax on Britain's 23,359,000 homes has been greeted by a mixture of apathy, private grief and even grudging welcome.

David Camp, 67, a semi-retired Essex farmer facing the highest council tax in Britain, will not be taking to the streets in protest at his pounds 1,974.65 household bill. Instead he will be appealing to the Valuation Office to put his Roydon farmhouse into a lower tax band. He is also relying on ministers to cap the spending of Labour-led Harlow District Council, one of only six councils to breach the Government's capping limit this year. A government announcement on capping is expected soon, and Harlow has deliberately delayed issuing its council tax bills until a decision is made.

Last year's poll tax bill for Roydon Lea Farm, where Mr Camp lives with his wife, Trixie, and two sons, totalled pounds 1,206. Mrs Camp recalls that their 1989 domestic rates bill was of a similar size. Roydon Lea Farm is one of five Harlow properties in council tax Band H, valued at more than pounds 320,000 at April 1991 prices.

Mr Camp describes the prospect of a pounds 1,975 bill as 'incredible - particularly if you look at the state of the property. It's old and in poor condition.' He also objects to paying more than three times as much as the owner of a pounds 1m mansion in Mayfair, where Westminster City Council's Band H tax is less than pounds 600.

Harlow council and Roydon Lea Farm are very much the exception rather than the rule, however. The general picture from the introduction of the council tax is one of lower household bills and a continuing squeeze on local authority spending.

A recent survey by Public Finance and Accountancy magazine found that more than 20,000 local authority jobs would be shed in the next 12 months as a result of councils' spending decisions. It also found that, after allowing for the transfer of further education, councils were planning to increase their budgets by an above-inflation 2.7 per cent in England and Wales and by 2.2 per cent in Scotland. But strict capping rules forced a substantial minority of authorities - 189 out of 529 - to increase their budgets by less than the then prevailing inflation level of 1.7 per cent. Among this number, 30 froze their budgets and 51 made cuts of up to 23 per cent.

The survey found that councils were budgeting to exceed the Government's spending targets by pounds 804m (2.2 per cent) in England, pounds 55m (2.3 per cent) in Wales, and pounds 66m (1.3 per cent) in Scotland. This overspend, together with councils' 'surcharges' for non-payment, means that council taxes once again exceed government targets in all regions of Britain.

In England, where the 'target' council tax for a two-adult Band D property (valued at pounds 68,000 to pounds 88,000) was pounds 492.66, the PFA survey puts the Band D average at pounds 568.90. A similar survey by the Local Government Chronicle puts it at pounds 570, while the Government yesterday put it at pounds 569. In Wales, with a pounds 259.63 target for Band D homes (worth pounds 51,000 to pounds 66,000), PFA puts the Band D average at pounds 327.92 while LGC puts it at pounds 325. In Scotland, with a pounds 412.55 target for Band D homes (worth pounds 45,000 to pounds 58,000), PFA puts the Band D average at pounds 558.32.

Any change from one system of local taxation to another makes it difficult to assess the effects of the change on individuals and households. This is particularly true of the council tax, where Band D was chosen by ministers as the currency in 1991 before it became clear that the average house value was actually in Band C.

The PFA survey compared each council's budgeted income from council tax with its budgeted income from poll tax. An average household bill was calculated by dividing council tax income by the total number of dwellings shown on the Valuation List. This methodology, which allows for the effects of household sizes, council tax valuations, and exemptions, produced average bills of pounds 445.70 in England, pounds 421.89 in Scotland, and pounds 262.76 in Wales. Compared with the poll tax, it showed average reductions of 6.2 per cent in England, 6.4 per cent in Scotland and 0.5 per cent in Wales.

New figures released on Monday by the Department of the Environment allow the figures for England to be further refined by adding in councils' assumptions for non-collection of each tax. This shows that councils have reduced their non-payment assumptions from 5 per cent under the poll tax to 3.7 per cent under the council tax. In Scotland the non-payment assumption is down from 12.7 per cent to about 6 per cent.

Adding in the 3.7 per cent non-payment factor increases the average English council tax bill to pounds 462.96, but the comparison with poll tax bills now shows a reduction of 7.5 per cent. The Government using slightly different definitions, yesterday put the average bill at pounds 456, a reduction of 6.2 per cent on the average poll tax.

Until more information is collected and published on the spread of rebates and transitional relief, the full effect of the change from poll tax to council tax will not be known. But there is general consensus within local government that the new tax is a vast improvement on the old.

Mike DuBock, finance officer of the London Boroughs Association, says transitional relief has, at least in the short term, helped to take the sting out of the council tax.

Martin Pilgrim, finance under-secretary of the Association of Metropolitan Authorities, says: 'It might well be that people have been 'persuaded' that this is a fair tax - or at least a darn sight fairer than the poll tax. I just hope that people will pay it now.'

Oxford's assistant treasurer, David Magor, is surprised how little reaction there has been to bills going out. It is like the end of the Battle of Britain, he says. 'You are waiting for the next attack to come, and it doesn't come. It's now just a matter of convincing your staff that you are back to normality.'

(Photograph omitted)

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