Why has the council tax gone up by 4.7%?

The County Council’s council tax remains among the lowest of all county councils and this year’s rise of 4.7% is the smallest for 20 years.

The 2004/05 budget was set at £1,052.3 million, an increase of 5.9% on 2003/04 (after adjusting for changes in service responsibilities). Over 60% of the budget is funded by the Government through grant and business rates and the remainder through council tax.

Each year the Government makes assumptions about how much a particular authority needs to spend to meet its service demands, known as the Formula Spending Share (FSS). In 2004/05 for the first time the increase in funding from Government (6%) was greater than the rise in our FSS (5.3%) This is a clear sign that the Government recognises that a repeat of the large increases in council tax is occurring unsustainable.

The changes in the budget compared with 2003/04 are: costs absorbed from efficiency improvements of £5 million; inflation of £27 million and additional spending of £36 million. At a service level the budget increase is as follows:

an additional £24 million going direct to schools which includes an extra £2.2 million for schools in the more deprived areas of the county
an additional £15 million on services mainly for older people and children to meet the increases in numbers requiring care
£19m to maintain other services and make targeted improvements.

Additional money for schools

The changes in the Education grant formula in 2003/04 had a very destablilising effect on school budgets, particularly adversely affecting local authorities in the South East. The Government has addressed this by allocating additional money to schools in the form of a ‘4% per pupil minimum guarantee’ increase for every school. Whilst the County Council has consistently spent above FSS on its priority area of Education, we have welcomed the increase and ‘passported’ the full amount direct to school budgets. In total we will invest an additional £24 million in school budgets in 2004/05 including £2.2 million for schools in deprived areas.

More for services for children and older people

The budget for services for children and older people has risen by £15m in 2004/05 to meet continuing and new pressures on social care services. The largest increase is for children's services and will fund an additional 72 children in care in 2004/05.

Increased spending on services for older people is to reduce delayed transfers from hospital, meet new minimum standards for staffing levels within care homes, meet the high demand for residential and nursing care and helping more people to live at home. In addition to increased demands on services, price increases incurred by the County Council for residential care services in this sector are expected to continue to run well above inflation.

Targeted improvements in other services

£8 million is required to meet the cost of inflation on services other than schools and Social Care. Increasing waste volumes and the introduction of new waste disposal facilities add a further £0.9 million to the cost of the waste management contract. The take up of increased Government borrowing approvals for capital schemes will add £4.4 million to the County Council’s borrowing costs in 2004/05, although this is matched by additional Government grant. £1 million has been added to revenue funding of capital schemes to cover a potential shortfall in the funding of the current investment programme.

The budget also includes additional funding for a number of specific improvements in services as set out below:

£0.5 million to continue the successful CANGO rural transport scheme now that the initial Government funding has been withdrawn, to fund new community transport initiatives and to support additional tendered bus services.
£0.3 million to extend library opening hours and for other initiatives to increase access to recreation and heritage services.
£1.0 million for up to 40 community support officers accredited by the police to be deployed in those areas where antisocial behaviour creates greatest public concern.
£1.0 million from the income derived from reducing the council tax discount on second homes from 50% to 10% mainly for investment in affordable homes working in partnership with district councils and housing associations to establish shared equity schemes for key workers, and for spending on local roads in the Fareham area.
£0.3 million for two further new initiatives involving the offering of 40 modern apprenticeships within the County Council and involving our contractors; and to pilot schemes in the Andover area to provide concessionary fares for young people at weekends and evenings and other improved youth services.
£0.6 million to improve the effectiveness of children’s care services and to prepare for the new responsibilities in the Government’s Green Paper ‘Every Child Matters’.
£0.3 million for enhanced support to the voluntary sector.

Budget 2004/05 homepage

County Treasurer's