Opinion: ‘Time to re-think Peterborough’s unfair Council Tax’

The council recently published its phase 2 budget proposals and councillors will get to vote on them at full council on March 2.

What we know is there will be a significant increase in Council Tax and cuts in services. Children’s services and adult social care are going to be hit and our much-valued library services are under threat.

We know that libraries are vital for encouraging children from less wealthy backgrounds to read and expand their horizons.

My own ward of Paston and Walton only has a mobile library calling for a few minutes each week; even the large libraries in the city centre, at Werrington and at Bretton, only open for around three hours a day and even that basic level of service is under threat from Conservative council cuts.

The Conservatives have run Peterborough City Council continuously for 22 years.

The current council budget crisis reveals they have not managed the council finances well during that period.

But central government needs to also take a lot of the blame, as Government funding to Peterborough and other councils has been cut dramatically in recent years.

A sad fact is that councils are very much under the thumb of central government.

Only around half of council income comes from Council Tax, with a quarter coming from business rates and another quarter from direct Government grants.

Even Council Tax is controlled by Government, as each year ministers impose a “cap” which limits the percentage increase in Council Tax that councils can impose.

This means that England is one of the most centralised countries in Europe; arguably Communities Minister Michael Gove has more say over spending in Peterborough than do democratically elected local councillors.

Many people recognise that the Council Tax system is broken and no longer fit for purpose. Introduced as a temporary replacement for the hated Poll Tax in the early 1990s, it has instead remained in place without any changes since then.

Unbelievably, Council Tax bands have not been adjusted to reflect the dramatic increases in property values.

The result is that Council Tax has become a deeply regressive tax, with lower income households paying a much higher percentage of their property value in tax than higher income households.

Peterborough gets hit particularly badly as a big proportion of our houses fall into the lowest Council Tax band.

In the short-term, Liberal Democrats want to reform Council Tax by adding higher bands for more expensive houses and properties, so that those with the most resources make a greater contribution. But in the longer term, we believe that a new, fairer system of local government taxation is needed, one that taxes people according to their ability to pay and enables councils to raise enough money to fund most of their own spending.

A local income tax could be one of the best ways of achieving those aims. We would replace business rates with a new tax on the land value of commercial sites, which would raise money and also help prevent industrial sites lying derelict for long periods.

Councils also should be given more power to raise their own innovative sources of income: eg issuing bonds to raise money for environmental projects such as tree planting and renewable energy generation.

In short, the “big brother” approach towards councils needs to end and Government needs to put more trust in them to deliver what local people want and need.

In neighbouring Northamptonshire recently, Government shut down the council because of alleged financial mismanagement.

They have threatened to do that in Peterborough if we don’t do precisely what they tell us.

We need to get Peterborough City Council finances in order, but we need to do that in a way that reflects the priorities of local people and not just in response to heavy handed “bully boy” tactics by Government ministers.