Crisis leads to council tax referendum call

Copied from Local Government Chronicle online
30 May, 2013 | By Mark Smulian

Herefordshire Council could become the first to hold a council tax increase referendum after an emergency meeting over a budget crisis.

This followed a review by incoming chief executive Alastair Neill, which found the budget set only in February contained errors and weaknesses.

It must now save an extra £8.4m this year and make 290 job cuts, against some 120 originally intended.

The council has saved some £21.1m over the last two years, and must save a further £32.2m over this year and the next two.

Mr Neill’s review found areas in the February budget “where the plans were not sufficiently resilient and [where] additional savings need to be made to ensure that the council delivers its plan within its budget”.

This included £1m of procurement savings which had “slipped and needed to be tackled” and £3.8m of learning disabilities grant which had in effect been counted twice.

Tony Johnson (Con), the council’s new leader, said: “We are facing a very challenging time over the next few years and as such we need to consider alternative approaches to delivering some of our services.

“Inevitably, non-mandatory services must bear the brunt of the cuts and although this will unfortunately involve job losses, it does not automatically mean the loss of services.”

The extraordinary council meeting agreed that the cabinet would consider holding a referendum to increase the 2014-15 council tax above whatever cap level is imposed.

Some 25% of Herefordshire’s income comes from council tax, which it had frozen from 2011-13. It increased it this year by 1.9%, equivalent to £1.5m.

Cllr Johnson said: “We must consider the possibility of raising council tax responsibly and proportionately across the county, as we begin to consider next year’s budget.”

Before doing so, he wanted to gauge whether residents “would be prepared to vote in favour of raising taxes to protect the county’s vital services”.

The coalition dropped Labour’s council tax cap, but substituted a system where tax could be raised above a nationally defined level only following a local referendum.

No council has yet held such a referendum, fearing both the cost and the likely outcome. In Herefordshire’s case a referendum would cost £100,000 to conduct.

In a joint statement with Unison, Herefordshire said it had agreed to reduce from three to two the number of days of unpaid leave to be taken during the Christmas period and to increase redundancy terms from the statutory minimum to 1.5 times that level.

Unison would prefer to keep in-house provision but will engage “fully in consideration of alternative business models that may be required in areas of service, where the council has to reduce or withdraw funding”.

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