Agenda item

Item 8 (i)

 

Robert Evans OBE (Stanwell and Stanwell Moor) to move under standing order 11 as follows:

 

This Council believes that:

 

The current system for local government finance is no longer fit for purpose.

 

This Council resolves to:

 

Call on the next government to bring in a fairer and more robust system to replace Council Tax.

 

 

 

 

 

Item 8 (i)

 

Under Standing Order 12.3 the Council agreed to debate this motion.

 

Under Standing Order 20.3 (a) Robert Evans OBE moved a proposed alteration to the original motion standing in his own name, which had been published in the supplementary agenda on 18 March 2024.

 

The proposed alteration to the motion was as follows (with additional words in bold/underlined and deletions crossed through):

 

This Council believes that:

 

The current system for local government finance is no longer fit for purpose.

 

This Council resolves to:

 

Call on the next government to bring in a fairer and more robust system to replace Council Tax.

 

Under Standing Order 20.3, the proposed alteration to the original motion was put to the vote and Council agreed to the proposed alteration and it was therefore open for debate.

 

Robert Evans OBE made the following points:

 

·         Noted that the current system for local government finance was no longer fit for purpose, it was largely based on Council Tax and a reform of which would be popular and make economic sense.

·         Noted that thirty years since the current Council Tax system was introduced, successive governments had not acted to address the long overdue reform.

·         Noted that Council Tax was based on 1991 property valuations, since then average house prices in Surrey had increased more than five times.

·         Stressed that the Council Tax system was unfair as those in the cheapest properties in Surrey pay disproportionately more than others in multi-million-pound homes.

·         Noted that if the motion is carried, Surrey could be at the forefront of change, sending a signal to a new government that reform was needed.

·         Suggested that in the short term, some new Council Tax bands could be introduced, meaning that those in larger more expensive properties contribute a fairer percentage of their income to the Council.

·         Suggested that in the long term, Council Tax, Stamp Duty Land Tax and the bedroom tax could all be replaced by a proportional property tax based on property values annually, doubled for empty homes; £5 billion potentially could be raised and distributed fairly. 

·         Suggested that a land tax would be more radical whereby the land would be valued and whilst it would be fairer, it would take longer to develop.

·         Emphasised that the motion did not exclude alternative suggestions by Members.

·         Believed that the next government must address the inequities, to make the country’s economy stronger.

·         Noted that there was no reason that a wealthy county like Surrey, should be constantly short of money and cutting services.

 

The motion was formally seconded by Will Forster, who made the following comments:

 

·         Noted that councils’ funding nationwide had been cut by a quarter since 2016, the current system was broken and needed fixing.

·         Noted that Buckingham Palace was valued at £1 billion, was in Band H and was charged just over £1,800, that was equivalent to a Band B property in Surrey.

·         Noted that the Palace was charged less than an average three-bedroom house in Blackpool and 46% of households in England would pay more Council Tax.

·         Referred to Parliament's cross-party Levelling Up, Housing and Communities Committee report released earlier in the year which noted that there was a £4 billion gap in council funding for 2024/25.

·         Noted that the County Councils Network (CCN) stated that even well-run and efficient councils would not be able to withstand further funding reductions.

·         Noted that demand was not reducing, the CCN called for a cross-party discussion between the political parties nationally as to what councils can be expected to deliver whilst facing a further funding squeeze.

·         Noted that the Director of the Institute for Fiscal Studies stated that the Government knows that Council Tax was outdated,inequitable, inefficient and anti-levelling up; and it was not brave enough to address that.

·         Quoted the Leader that a non-partisan discussion was needed about the future of business rates and Council Tax, which were based on outdated valuations; there needed to be a ‘modernised tax system’ based on ‘the ability to pay’.

·         Stressed that the Government was not listening, the Council could help bring about the change needed if the motion is carried.

 

Eleven Members made the following comments:

 

·         Hoped that the focus would be on the first part of the motion and not about deleted aspects of the motion in the second part.

·         Noted that the Community Charge or poll tax was implemented in Scotland first as there had been a call from residents to make changes, it had been reversed due to its unpopularity.

·         Noted that the Council Tax system was brought back in which did not differ largely from the previous domestic rates system; it was difficult to produce a system that meets the needs of all residents.

·         Noted that over many years the Council had repeatedly stated that it was concerned about the funding formulas and settlements received from the Government.

·         Noted that the Council’s current in-year budget expenditure position was that the cost of meeting the demands had exceeded the income received.

·         Noted that it was difficult for the Council to plan for the medium term due to the Government’s reluctance to provide multi-year funding settlements.

·         Welcomed the six-month extension of the Household Support Fund, yet that was introduced with little notice in the Spring Budget and would eventually end.

·         Noted that the Member for Tadworth, Walton & Kingswood had long campaigned for a change in the way that the highways maintenance grant was calculated, the funding allocation was based on road length and did not account for traffic volumes and usage, which disadvantaged Surrey.

·         Noted that when public health responsibilities were transferred to local authorities, the grant allocations were based on the NHS spend rather than the needs assessment; the Council was the fifth lowest funded authority receiving a grant of £34.73 per head compared to £199 per head for the City of London.

·         Called for the reform by the next government in the way local authorities are funded, the system of local government finance was no longer fit for purpose.

·         Agreed that there needed to be an overhaul of the local government finance system; stressed that for the Council to be able to deliver its services, greater funding was required whether from the Government or locally.

·         Urged caution, noting that the Council remained in a negative revenue support grant position whereby it owes the Government around £20 million annually, that had been waived over the last few years.

·         Called for a fair funding review, however noted the risk around there being a more heavily weighted deprivation index, which would disadvantage the Council.

·         Noted that Surrey had an ageing population, 70% of the Council’s budget was spent on the delivery of social care and regarding Home to School Transport, by 2026/27 upper tier authorities would be in difficulties if the current level of inflation and demand continues.

·         Disagreed with the suggestions put forward by the proposer but agreed with calling on the next government for a fair and more robust system; recognised that business rates needed to be reviewed.

·         Highlighted that the County Deal was an opportunity to look at fiscal devolution, the Council would have greater control over its activities in the county and how it funds the services and raises money, for example through a tourist tax.

·         Noted that £1.2 billion was needed to run the Council, 76% of that was generated from Council Tax, if Council Tax was to be abolished then that money would have to be generated some other way.

·         Agreed that local government was at crisis point and a different approach was needed.

·         Noted that as Chair of the CCN would continue to lobby the current and next governments.

·         Noted that the Government must act to ensure that local government can deliver adequate services to support the local population, as it faces a funding reduction and a significant increase in social care costs.

·         Noted that in addition to the County Deal, the Government must enable councils to benefit from and expand their ability to raise revenue locally, a new sustainable funding system would enable to Council to meet residents’ needs.

·         Noted that for example, an airport passenger duty would raise just under £4 billion this year and the Council deserves its fair share being sandwiched between Heathrow and Gatwick Airports, there could be a local levy on fuel duty in Surrey’s petrol stations and an increase in the levels of fines for breaches.

·         Agreed that an increase in the number of Council Tax bands was needed to relieve the pressure on local government.

·         Referred to the call for a voluntary contribution scheme in the budget amendment at the last Council meeting which was not agreed, noting that such a scheme had been implemented at Waverley Borough Council, and other borough and district councils such as Woking Borough Council.

·         Noted that reform was necessary regarding all local government funding, that needed to be reviewed cross-party nationally.

·         Noted concern that short term financial pressures caused local authorities to make irrational decisions such as selling properties cheap, which they could have developed themselves for more money; in some local authorities, legal issues had built up over time causing bankruptcy.

·         Noted that all taxation is unfair, defining fair taxation was difficult and often rewarded some at the expense of others.

·         Noted concern around having a mansion tax, the market would be distorted and property price inflation would penalise those who had struggled to buy their family home, often the elderly who were funding their social care through mortgaging their house.

·         Noted that proper consideration and planning was needed around the suggestions to reform local government finance.

·         Noted that residents’ Council Tax bills were not equivalent to the total of what their council was spending, as councils received government grants, a share of business rates, money from fees and charges, and funding from capital programmes.

·         Noted that Surrey’s businesses paid around £600 million annually to the Government, yet the Council and the borough and district councils received around £130 million a year; called for a campaign to reform business rates so that residents receive a greater share of those.

·         Noted that in the past at a different local authority, 70% of its expenditure was on education and it was increasing, the Government took over the running costs from local authorities replacing that responsibility with social care; today 70% of local authorities’ expenditure was on social care.

·         Noted that the focus must not be solely on how local government generates money from residents, the Council and borough and district councils must consider what services they would like to be responsible for.

·         Noting the importance of early intervention, did not understand why if the Council wants something done it has to wait for the General Election; the movers of the motion could discuss the matter with their national political party colleagues committing their party to address the issue via their manifestos, to get the mandate for it and for the electorate to then decide.

·         Supported having additional Council Tax bands so wealthier residents with larger homes contribute significantly more than those least able to pay.

·         Noted that Council Tax was regressive, yet councils had increased their Council Tax by just under one third above inflation since 2010 and their core spending power had been reduced by 27% in real terms.

·         Noted that councils were receiving less money from the Government and from business rates, yet residents were paying more for less services.

·         Noted that those most able to pay tax should do so, society is created through the pooling of resources; leaving no one behind.

·         Noted that councils must act in fairness to future generations, for example through a mandated government responsibility for action on climate change.

·         Noted that the proposer had shown a misunderstanding of the commercial property market, it was wrong to infer that a new government using a new tax system would allow the Council to keep hold of all the money raised.

 

The Chair asked Robert Evans OBE, as proposer of the motion to conclude the debate, he made the following comments:

 

·         Noted that he did not have a hotline to any incoming government, less so than the Cabinet Members to the current government.

·         Highlighted that overall, there was consensus on supporting the motion.

·         Noted that he had put forward some suggestions for change and welcomed the other suggestions made around an airport tax and tourist tax; supported the review of business rates.

·         Rejected the comment that all taxation is unfair, had been to countries without a system of taxation where instead there was bribery and brutality.

·         Reiterated that the motion stated the current system was not fit for purpose and asks the next government to bring in something fairer and more robust; believed that a good government is bold and should consult on creating a better system.

·         Encouraged the Members who were Parliamentary candidates to take the motion forward nationally, to work to improve the system.

 

The motion was put to the vote and was carried with one abstention.

 

Therefore, it was RESOLVED that:

 

This Council believes that:

 

The current system for local government finance is no longer fit for purpose.

 

This Council resolves to:

 

Call on the next government to bring in a fairer and more robust system.