County Treasurer's

Why has the council tax gone up by 15%?

The Government has introduced a new system for distributing grant between local authorities. The new formula is being phased in over the next 2 or 3 years, and is expected to result in the County Council receiving about £48m per annum less Government grant than had the previous formula been retained. This is equivalent to about 14% of 2002/03's council tax income. The County Council loses grant of £21m in 2003/04 and expects to lose the remaining £27m over the following two years. The beneficiaries of the new grant distribution arrangements are mainly urban authorities in the North and the Midlands, while County Councils in the South East are the main losers.

The transitional arrangements for 2003/04 result in the County Council receiving a 3.8% increase in grant next year. Yet even after the changes in the grant formula, the Government still expects the County Council to increase its spending by 5.7% in 2003/04.

However an increase of 5.7% would not be sufficient to meet inescapable service demands and legislative pressures. Some of the main pressures are set out below:

  • demographic changes, market pressures affecting the price of social care services in the South East, the Government's plans to fine Social Services authorities for delayed hospital discharges, and exhortations to improve performance against other Government targets, all mean that spending on Social Services cannot be contained within the 6.8% increase in the Government's grant settlement. Spending is planned to increase by 11.6% to avoid cuts in services

  • support for highway maintenance has been reduced by 1.6% yet in order to arrest the deterioration in the condition of minor roads and footways, increased spending over and above the level of inflation is required and an increase of £3.5m is proposed in 2003/04

  • government plans allow for increased spending of £2m (2.4%) on Environmental, Protective and Cultural Services. Yet unavoidable increases in the County Council's waste management contract alone are expected to add £4.5m (14.8%) to the County Council's budget in 2003/04.

For these main reasons, the County Council's budget increase is 8.2% in 2003/04, even after allowing for £7m of efficiency improvements and other savings.

Because Government support finances 63% of the County Council's spending, the effect of a 8.2% increase in spending accompanied by a 3.8% increase in grant is to require a 15% increase in council tax.

Though Hampshire's increase in council tax is the 11th highest of the 34 County Councils, its spending increase is 10th lowest. It is because of the effect of grant redistribution, which results in Hampshire's grant increase being the equal lowest, that the increase is above rather than below average. However Hampshire's Band D council tax of £844.56 remains the 9th lowest County Council council tax, at about £25 below average.

Spending changes since 2002/03

Budget 2003/04 homepage