Archive for the 'tax' Category

Dodgy statistics and Labour’s local election launch

So, Labour has launched their local election campaign with Ed Miliband claiming that they are “your first line of defence” against public spending reductions. An interesting thought, and I’m sure that people will be able to make up their own minds as to whether he (and the rest of his colleagues in the former Labour Government) should bear any of the responsibility for those public spending reductions. Certainly I thought that the sight of him speaking at the “Stop the Cuts” rally at the weekend, and using Martin Luther King and the Sufragettes to support his case, was one of the more cynical acts of political opportunism I have seen in recent years. (As David Cameron said yesterday – Martin Luther King had a dream and Ed Miliband is still living in one!)

Labour are also up to their old tricks again with figures and statistics. They make their usual claim that council tax bills in Labour-controlled councils are lower than those in Conservative-controlled ones. Which is of course nonsense as they are comparing apples with pears. Labour-controlled areas tend to be in the city centres which have a much greater percentage of homes in the lowest council tax bands which pay less council tax. Therefore, the council tax in these areas, averaged across all bands, is obviously going to be lower. However, if you make a proper comparison – i.e. with homes in Band D – then Conservative councils have lower council tax bills by £43 compared to Labour councils (and £114 a year less than Liberal Democrat-controlled ones!).

They also don’t really have a leg to stand on when it comes to this argument as they opposed the Coalition Government’s council tax freeze policy which will save an average family up to £72 a year on a Band D home.

Locally here in Brighton & Hove, of course, Labour has an even worse record on council tax – having increased it by 124% (or £743) during the 10 years they were in control of the City Council. And back at Budget Council on 3rd March, they (and the Greens) vetoed our proposed 1% reduction in council tax for next year. Do we really want a return to the days where council tax payers were constantly being asked to bail out the profligacyof their Council?

Labour must be honest with residents over spending plans

So Labour Group Leader Cllr. Gill Mitchell thinks families will be £1,500 worse off next year due to reductions in Government spending.

This does rather beg the question then of why at Budget Council her Group voted against our proposed council tax and resident parking permit reductions which would have put money back in to local people’s pockets!

But to be quite honest, Labour do not have a leg to stand on when it comes to criticising the actions of the Coalition Government. Who was it who left the country with the worst structural budget deficit in the developed world? Who was it who doubled our national debt during their years in power? And who was it in Brighton & Hove who presided over a 124% increase in council tax (that’s £743 for a band D home) during their 10 years in control of the council? Yes, the Labour Party.

Their tactic now seems to be denying that the Labour Government had anything to do with all this – blaming it all on those nasty bankers. Well firstly, as I have argued before, the public finances were way out of control even before the banking crisis hit. And secondly, if the bankers did act recklessly and irresponsibly (as some of them undoubtedly did), then why didn’t the Government do anything about it during the 13 years when they could have regulated to stop it?

Labour’s pre-budget announcement today shows that they still aren’t being honest with people about how they would deal with the deficit – and they are still racking up new spending commitments by the week. Yes, things are going to be tough for the next couple of years but I firmly believe that the bedrock of economic growth in the future has to be getting the nation’s finances back in order as soon as possible.

A budget for the whole City

Last week we unveiled our budget proposals for 2011/12, the centre-piece of which is a 1% reduction in council tax. This would be the first council tax decrease in the history of the City Council and would leave residents in a ‘band d’ home almost £60 better off than if council tax had gone up by inflation. This is in stark contrast to the increase in council tax of 124% imposed by the previous Labour Administration during their 10 years in charge of the Council.

Other measures in the budget include:

  • A 5% reduction in the cost of resident parking permits
  • An additional £500k of new money for youth services
  • Protection of the budgets for voluntary organisations, Supporting People, Homelessness, Aids Support and respite for carers.
  • Free swimming for under 11s
  • Increased small grants for sports clubs and funding for the Take Part Festival
  • Funding to refurbish Portslade Town Hall
  • Removal of the controversial Grand Avenue / The Drive cycle lane
  • More funding for repairing potholes, pavements and street lighting
  • Establishing a new Local Homes Venture Fund for new housing

In addition, in contrast to many councils up and down the country, we have committed to:

  • No library closures and no reduced opening hours
  • No closures to Sure Start Children’s Centres
  • No cuts to City bus services
  • No closures of public toilets
  • No move to fortnightly bin collections
  • No enforced staff pay cuts and a minimising of compulsory redundancies

All this has been achieved in spite of a £17 million reduction in the Government’s Formula Grant to the City Council. This is not a cuts budget, this is a budget to support the City. At a time when residents are struggling with high fuel and food bills we think it is important that we give them some relief by reducing their council tax and parking permits. The proposals will now go before the Full Council for approval on 3rd March and I would urge the opposition Groups to think very carefully before casting their votes. I don’t think that residents will thank them if they combine to overturn this budget.

A significant part of the £24 million savings package which we are putting forward have come from the innovative Value for Money review. This review was initiated in late 2009 when it became clear that councils would be required to make a significant contribution to the Government’s national debt reduction package. Measures taken include:

  • removing vacant posts
  • improving procurement practices
  • cutting out unnecessary layers of management
  • more effective management of sickness absence
  • cutting down on the use of agency staff
  • working to share costs and buildings with other councils and public sector partners in the City.

We have been planning very carefully for these challenging times and I think that the hard work has paid off. We have managed as far as possible to cut the cost of delivering services whilst doing our utmost to protect the frontline.

This has not been an easy budget to set by any means but we have made full use of the new freedoms and flexibilities provided by the Government’s decision to remove the ringfence on almost all their grant funding. This has allowed us to protect all our Sure Start Children’s Centres and funding for vital community safety work which we would otherwise have been forced to cut.

Increasing efficiency can protect frontline services

A very interesting report caught my eye this week. Written by the Westminster Sustainable Business Forum, it is about how councils, and the wider public sector, should be getting much greater value for money (and sustainability) out of the buildings and land we own. With the country’s public finances being as tight as they are at the moment, it is a very timely piece of work.

The report contains some fascinating figures. The value of national public sector property assets is estimated at £370 billion, around £250 billion of which is owned by local government.

These assets cost around £25 billion just to run every year, so you can imagine that there is vast potential for achieving savings by lowering operational and maintenance costs.

Reading the report, I was very encouraged that, here at Brighton & Hove, an awful lot of the things that the Forum recommends we are either already doing, or are planning to do over the next few years.

For example, they suggest that local government can achieve efficiency savings through decreasing the space it occupies by 20-30%, by implementing low cost, flexible working practices. At the Council we have already launched a “workstyles” project as part of our value for money programme, the first phase of which involves moving around 600 staff from Priory House to Bartholomew House by Brighton Town Hall. And we are looking at other options to make better use of our civic and staff buildings over the medium to longer term which I’m confident will deliver better value for money and better customer service.

We are also leading a city-wide public sector property group – another of the report’s key recommendations. This involves working with local healthcare providers, the emergency services and the universities to look at possibilities for sharing assets, accommodation and services in order to improve value for money and efficiency across the whole public sector – not just in our individual ‘silos’.

And from the sustainability angle, we are doing a huge amount of carbon reduction work looking at Energy Service Companies, participating in the Carbon Reduction Commitment and making use of the new Feed in Tariffs to generate cheap electricity in our civic buildings and council housing. Energy costs are already high and are only likely to get more expensive so it is vital that we minimise these as far as possible.

So, all in all, I think we are making good progress. There are other areas in the report which we will be looking at more closely and clearly, with a piece of work like this it isn’t going to happen overnight. However, as the report’s authors state, with the savings that all public sector organisations are having to make over the next 4 or 5 years, this work is not optional. And when we talk about protecting frontline services by driving down back-office costs, this is precisely the sort of thing we mean.

Who to blame for the public spending cuts

The local Labour Party are accusing me of denying them a debate on the £3.5 million of in-year cuts which we are having to make as a result of Eric Pickles’ budget announcement back in June.

This claim flies in the face of what is actually happening! There will be a full debate on the in-year budget cuts at the Council meeting tomorrow (Thursday). Any comments and suggestions from the opposition groups will be taken on board in time for the Cabinet meeting on 22nd July where the final decision will be taken. At this stage we don’t envisage any of the specific budget proposals falling outside of the framework which was agreed at the budget Council meeting in February. Therefore, these decisions are quite rightly being taken by the Cabinet.

I must say that I find it a bit rich for Labour councillors to be talking about schools not being built and roads not mended when they know full well that it was their Government which has left the country bankrupt and the new Government is having to pick up the pieces. The outgoing Chief Secretary to the Treasury – Liam Byrne – was quite right when he said that there was ‘no money left’. And this is not just because of the international financial crisis and subsequent bank bailout as Labour politicians like to claim – as the respected independent think tank, the Institute for Fiscal Studies, confirm, there was a massive structural deficit before any of this happened. Here is their exact quote from “The Public Finances: 1997-2010”:

“During Labour’s first four years in office, the public finances strengthened further, as the new Government stuck to the tight public spending plans laid out by the Conservatives. The following seven years, however, were characterised by fiscal drift. By the eve of the financial crisis, this had left the UK with one of the largest structural budget deficits in the developed world.”

Labour claim to be the champions of the poor and the vulnerable but it is their reckless approach to taxing and spending which is now directly threatening some of the vital public services and benefits which many of them rely upon.

National Insurance hike would hit Brighton & Hove Hard

The Government’s proposed 1% rise in National Insurance would not only hit residents hard, it would also be another body blow for businesses in Brighton & Hove, at a time when they can least afford it.

At the City Council we have calculated that if it goes ahead, the rise will cost us – as the City’s largest employer – an extra £1.5 million a year. That is £1.5 million of local council tax payers money going straight back into Treasury coffers to pay off the massive debt they have racked up over the last 10 years or so. And at a time when our budget is under such pressure, it is £1.5 million we can ill afford to lose.

Councils wouldn’t be the only public sector organisation to lose out – nationally, the NI increase would cost the NHS £208 million, schools would have to fork out £66 million (equivalent to something like 2,000 teachers) and the Police would face an increased tax bill of £43 million.

Paying off the national deficit has to be the top priority for whichever Government is at the helm next month. But bringing in another tax on jobs (which would hit both private and public sector employers and employees) is surely not the way to go about it. The only long-term way of addressing the underlying structural deficit is to make it easier for businesses to set up and expand. The private sector generates the wealth which enables us to have an NHS, state schools, policing and roads. Sadly, the parties of the Left seem unable to grasp this most basic of economic truths.

Brighton & Hove’s small businesses face triple tax whammy

Small businesses have taken a real hit recently due to the effects of the recession – difficulties in obtaining credit, less demand for goods and services etc. I think that in Brighton & Hove, by and large, they have weathered this storm very well so far but I do have some real concerns for the coming months.

The main reason for this is that a whole catalogue of factors are coming together to put huge pressure on our local firms. Firstly, VAT went back up to 17.5% on 1st January, pushing the price of goods back up in the shops. Secondly, employer and employee National Insurance contributions are both set to increase by 1% next year which will put huge pressure on local employers and is hardly likely to encourage job creation (I am pleased that David Cameron has indicated that if he wins the general election he will look to scrap at least part of this rise).

But perhaps most worrying of all is the Government’s business rate revaluation, due to come in force from April this year. Nearly 60% of our business ratepayers are set to have an increased bill and around 43% are due to be capped at 5% of 12.5% because their increases are so high. Government publicity has made significant noises about 60% of businesses nationwide experiencing decreases in rates but the opposite is true here in Brighton & Hove. The transitional scheme has been taken up by around 7% of our ratepayers but has merely created a potential time bomb, as businesses will be faced with paying back what they deferred last year, PLUS up to 12.5% increased rates.

I have recently written to the Government Minister – John Denham – on this matter asking him to give areas such as Brighton & Hove some extra support to get the City’s small businesses through this difficult period. We recently put forward a proposal as part of the Sustainable Communities Act which would give Council’s greater flexibility than we have now to offer rate relief to particular businesses and hopefully they will act on this.

A further factor which is adding to the pressure on our smaller independent retailers is the impact that the big supermarket chains are having. They are moving into the City in increasing numbers and under current planning regulations, Councils are powerless to do anything about it.

In the next few weeks I will be looking to build upon the Business Lifebelt Scheme which the Council launched last year which offers practical assistance to a range of businesses and sectors in the city, aiming to help them survive the economic downturn.

Small businesses are crucial to the continued prosperity and well-being of the whole City and I am continuing to look into any ways in which we can help them.


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