For 2011-12, the coalition Government offered a grant to English councils which froze their council tax. It was taken up by all councils. As promised in my written statement of 10 October, Official Report, column 2WS, I am now setting out the provisions for the new scheme that the Government are offering English local authorities which decide to freeze their council tax for 2012-13.
Council tax has more than doubled since 1997 and the freeze will offer real help to hard working families and those on fixed incomes such as pensioners. Compared to a rise of 5%, it could help save local taxpayers in England living in an average band D home up to £72 on top of the saving from this year’s freeze.
To help local authorities with their budget planning, my Department will today publish on its website an estimate of the grant each participating authority would receive. Grants will be finalised once authorities have reported, by March 2012, the tax base underpinning their calculation of council tax for 2012-13.
My officials will today write to local authorities with full details of how the scheme will operate. For the benefit of the House, the key elements are as follows:
a. The scheme will be voluntary; and will apply separately to each billing and major precepting authority in England (including police and fire and rescue authorities) rather than to each council tax bill issued. Local precepting authorities, such as town and parish councils, will not be included in the scheme, but I urge them to exercise restraint and help make sure no council taxpayer faces an increased bill.
b. Where an authority does not increase its basic amount of council tax in 2012-13 compared with 2011-12, it will be eligible to receive a grant equivalent:
i) for police authorities, and single purpose fire and rescue authorities, to a 3% increase in its 2011-12 band D figure multiplied by the authority’s 2012-13 tax base figure;
ii) for the City of London, to a 2.75% increase in its 2011-12 Band D figure multiplied by the authority’s 2012-13 tax base figure;
iii) for other principal authorities, to a 2.5% increase in its 2011-12 band D figure multiplied by the authority’s 2012-13 tax base figure.
Slightly different arrangements will apply for the Greater London Authority (based upon a combination of a 2.75% and a 3% increase) and for those authorities which restructured in 2009 (based upon a 2.5% increase), to reflect their unique circumstances.
c. The scheme for 2012-13 will comprise a one-off payment of grant, and is payable for one year only.
The Government hope all local authorities will sign up to the new scheme. When the provisions of the Localism Bill come into effect, local residents will of course have the power to veto excessive council tax rises in the future.
The arrangements for funding the 2011-12 council tax freeze are unaffected by this new offer from Government. The intention remains that authorities will receive grant in relation to the 2011-12 freeze in each of the remaining years of the spending review.