County Treasurer's

Hampshire County Council Budget 2004/05 questions and answers

What is the County Council's budget in 2004/05?
The County Council's budget in the next financial year will be £1,052.3 million. Of this, £646.8 million comes from Government grant, and the rest is made up from council tax.

What will be the increase in the County Council's portion of the council tax?
Council tax for County Council services will increase by 4.7 per cent, compared with 15 per cent in 2003/04. Overall, council tax in Hampshire is expected to increase by around six per cent when all local authorities have levied their charges.

What is the reason for this significant reduction in the County Council's portion?
In the last financial year 2003/04, the County Council's precept (charge) included a sum for Hampshire Fire and Rescue Authority (HFRA). This year, HFRA will be setting its own precept independently of the County Council. This means that that the County Council and HFRA will be listed separately on your bill as well as those for the Hampshire Police Authority, district councils and town or parish councils. The 2003/04 budget was also a ‘budget for recovery’, making up the loss of £21 million grant from the Government which was transferred to urban authorities in the north and midlands.

What will be the County Council's portion of the council tax for a Band D property?
Those living in a Band D property will pay £840.15 to the County Council in 2004/05, compared with £844.56 in 2003/04.

If the County Council's portion of the council tax is increasing by 4.7 per cent in 2004/05, why will I be paying £4.41 less?
This is because HFRA is setting its own precept in the next financial year. This has the effect of reducing, in cash terms, the amount payable to the County Council. Without the HFRA bill included in 2003/04, the County Council's council tax is equivalent to £802.39 - so the adjusted increase for the County Council's spending is £37.76 or 4.7 per cent.

There is increasing disquiet among some sections of the community, notably pensioners, that they cannot afford to pay an ever-increasing council tax. What is the County Council doing to help them?
We're very much aware that those on low and fixed incomes - not just pensioners - are finding it very difficult to pay their council tax bills. We did look into the possibility of offering pensioners some form of rebate on their council tax, but were told by legal advisers that we would be open to legal challenge from others on low incomes if we restricted this rebate to one section of the community. As part of our council tax benefits campaign, we're urging anyone having difficulty paying their council tax to contact the County Council's Information Centres on 0800 028 0888 to find out if they can claim financial assistance - many of those eligible are not doing so. We will also continue to press Government to fund the County Council properly.

Is money still being taken from Hampshire to give to other authorities?
Yes. In 2003/04, Hampshire lost £21 million of its Government grant so it could be transferred to urban areas in the north and midlands. This was the reason for the 15 per cent rise in council tax in the last financial year. In 2004/05, we have lost an additional £8 million, and we're due to lose another £19 million in the coming years. We launched our "Hands Off Hampshire" campaign in 2002 to explain to residents that council tax would have to increase substantially to make up the funding shortfall, and to lobby Government to reverse its decision. We believe this helped persuade Government that the increases in council tax could not continue, and something needed to be done to reduce their impact.

You say the County Council has lost another £8 million in 2004/05. Wasn't this given back to you by Government at the end of last year?
No. We were given an additional £7.5 million in December to help offset council tax increases, but it is coincidental that the two figures are similar. This extra amount has been given for one year and is intended ‘to deliver council tax increases in low single figures’ according to Nick Raynsford, the Minister for Local Government. Government gave us the extra £7.5 million shortly after an Audit Commission report blamed fundamental flaws in Government's funding system for massive council tax rises, so it was an attempt to put right this problem. This £7.5 million will not be continued in 2005/06, according to Government.

Is the County Council looking at its own services and making efficiency savings?
Yes. The County Council has achieved savings of more than £7 million in 2003/04 and plans to achieve further efficiency improvements of £5.0 million in 2004/05. We take very seriously the need to use our budget prudently. We have to perform a balancing act, though, because consultation with residents has consistently told us that people don't want us to cut council tax at the expense of services - this exactly mirrors our thinking. The Local Government Minister has also said that it is ‘now vital that councils meet the expectations of their taxpayers and budget prudently to improve services at a reasonable cost’.

Couldn't the County Council make further savings by employing fewer people?
The County Council employs more than 30,000 staff, both full-time and part-time. The vast majority of these provide frontline services, such as teachers and social workers, directly delivering a range of important services to the community. The County Council was re-assessed at the end of last year by the Audit Commission, which reconfirmed its ‘excellent’ rating - one of only 26 authorities nationwide to receive this top ranking. We employ first class staff in order to continue to provide the first class services that Hampshire residents expect. We are also carrying out a thorough review of all costs for Cabinet consideration. This will ensure that all items of expenditure are absolutely essential in the delivery of services

What sort of council tax increase can we expect in future years?
It is difficult to forecast because it depends upon the rate of grant loss. The best estimate is between seven per cent and eight per cent in both 2005/06 and 2006/07.

What do you think about the proposed changes to council tax in the future to make it fairer?
We have advised Government who are currently undertaking a review of the council tax system that council tax, as a form of property tax, is basically sound. However in its current form it places too great a burden on the council taxpayer to finance Government's spending plans culminating in the 15 per cent increase in 2003/04. Government has recognised this with its extra grant for 2004/05 so that it meets a fairer share from its tax revenues.

We have suggested improvements to a number of council tax bands and the ratio between them so that they better reflect an individual’s ability to pay. We have also suggested that Government needs to review its benefits system and thresholds so more assistance can be given to those on fixed incomes who need it, including pensioners. Finally we have argued that there would be less strain on council tax, and less reliance on Government grant, if business rates were returned to local control with appropriate safeguards on the rate of increase.

Why does the County Council's council tax consistently go up by more than the rate of inflation?
There are a number of reasons for this. Pay inflation tends generally to be higher than retail price inflation. Other Government imposed cost increases have to be met, for example the increase in employers' national insurance contributions last year and landfill tax last year and this year.

Price inflation in the private sector for residential care and other contracted services (such as repairs and maintenance of buildings) has also been much higher than the retail price index (RPI). Higher standards on waste disposal and increased volumes are another pressure.

There are also increased numbers of children in care, often requiring very costly individual placements, and increased numbers of frail elderly requiring care at home, and in residential nursing care to free up hospital beds.

Government-ordered increases in education spending were not fully funded by Government grant in 2004/05 leaving the council taxpayer to pick up the difference.

Finally, when cost increases are more than Government grant received, the difference falls on the council tax bill. As council tax is just under 40 per cent of our income, the council tax bill goes up by 2.5 times the spending increase.

Has the County Council consulted with the public over this rise, and what did they say?
We started the budget consultation back in July 2003 with a community workshop, run by MORI. This had a representative sample of Hampshire residents (by age, gender, socio-economic group and geographical location) to consider budget options assuming five, seven and nine per cent council tax rises. They felt that a seven per cent rise was appropriate to maintain services at existing levels. Similar consultations with specific stakeholders - business interests, residents and council tax payer associations, voluntary sector, local strategic partnerships, and Schools Forum produced a similar consensus. (The seven per cent rise is equivalent to the 4.7 per cent rise now recommended following the extra Government grant).

Budget 2004/05 homepage