COUNCIL TAX

Budget: Expect plenty of smoke and mirrors politics

The sector should expect more tax cutting smoke and mirror solutions at this year’s Budget, says Zoë Billingham. She warns: ‘There’ll be no hiding from the fact that taxes will be rising very clearly locally.’

Next month the Government will set out its last spring Budget before the next General Election.  Local government and communities are calling out for sustained investment across critical public services. But with the Government already trailing a promise of tax cuts at the national level, it's clear they will fail to address the reality of what is happening across our country.

At spring Budget, we can expect more tax cutting smoke and mirrors. According to the Resolution Foundation, the tax cuts government is touting at the national level are wedged between tax increases that have already happened and those that will need to come post-election.

And crucially they're tax cuts that the public are not asking for. We know through recent polling by the Fairness Foundation that the large majority of Britons are not supportive of tax cuts if they mean cuts to public spending.

At the same time, local government is being effectively forced to raise local taxes. Council tax is assumed by central government to be rising by maximum levels with scope for rises far beyond in some cases, with a rise of 21% planned in Birmingham, for example. Whilst the Government tries to convince people they are overall tax cutting, there'll be no hiding from the fact that taxes will be rising very clearly locally. Even so, this won't be enough to protect local government from ceasing services entirely or redefining the basic minimum of social care, in attempts to make the books balance.

The latest estimate on the gap in local government funding from the LGA points to £4bn over the next two financial years. In our forthcoming State of the North report, we urge the Government to offer up that cash as a starting point for putting council finances on a secure, long-term footing.

What we need, increasingly critically, is investment to underpin and support our critical public services. We know that every pound of good public investment can bring in a multiple of that in tax revenues in the future.

With a view only to the next General Election, we can expect plenty of smoke and mirror politics at the upcoming Budget. As a result, whoever is in government next will have a list of crises to fix that are more urgent and more critical than in any time in recent history, and local government should be up at the top of the list.

Zoë Billingham is the director of IPPR North. She tweets @zoe_billingham 

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