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Extra council tax revenue from new builds nearly wiped out by support requests, Hertfordshire authority reports

Extra council tax cash from new builds is almost completely offset by the number of people asking for support, a Hertfordshire authority has said.

According to Hertsmere Borough Council chiefs, Westminster has failed to think about the authority’s real-life ability to collect council tax money during a cost of living crisis.

They believe taxpayers have lost out on £101,000 in government funding as a result of the government’s maths – which could go towards day-to-day services such as waste collection, parks, community safety and leisure centres.

Hertsmere Borough Council’s four-year financial plan shows the authority can balance its budget in 2024/25. But by 2025/26, councillors will need to agree savings worth £594,000 – or £775,000 by 2027/28.

At a meeting on Wednesday, January 10, leader Councillor Jeremy Newmark (Lab, Borehamwood Cowley Hill) said: “It’s a budget that comes against a devastating backdrop in terms of local government funding around the country.

“Hardly a week is going by in which we are not hearing about another council either issuing a Section 114 notice – effectively a bankruptcy notice – or warning about extreme, searing, deep cuts in critical services in order to balance the budget.”

Authorities throughout the country including Thurrock Council in Essex, Woking Borough Council in Surrey and Birmingham City Council have had to stop non-essential spending to balance their budgets.

Cllr Newmark added: “It’s pertinent to place on record our disappointment [towards] central government’s provisional Local Government Finance Settlement.

“We’ve received a one-year settlement.

“There is simply no other sector in which one would be expected to provide a range of services of this nature and be at the behest of annual funding agreements.

“We desperately need multi-year funding settlements.

“We will be responding to the [government’s] consultation to point out our particular local disappointment that the finance settlement has not delivered for us what the government has promised in terms of a funding guarantee.”

Cllr Newmark said it “is a matter of pride” the budget does not propose frontline service cuts in 2024/25. “Every penny counts,” he added.

According to Hertsmere Borough Council, the Department for Levelling Up, Housing and Communities has assumed the authority can collect around 1.1 per cent more from council tax next year.

But “this assumption does not correlate to the reality which is that Hertsmere’s tax base for 2024/25 has stayed more or less static” with a growth of less than 0.006 per cent.

“Whilst there has been some new housing growth – 0.43 per cent – this has been almost completely offset by increases in claims for council tax support and other council tax discounts and exemptions,” a borough council report reads.

“The provisional settlement has overstated Hertsmere’s council tax requirement by £101,000 which in turn will have reduced the funding guarantee by the same amount.”

Taxpayers can apply for a reduction if, for example, they have low incomes, are students or have long-term hospital or hostel stays. The cabinet will put forward a budget which will assume council tax will rise by 2.99 per cent for technical reasons but leaders have confirmed they intend to refund the rate rise.

Opposition leader Cllr Morris Bright (Con, Elstree) told the cabinet: “I think £5 per home could be better used by this council rather than saying ‘OK, you can have your £5 back.”

He added: “Away from the posturing that may or may not go on [at a future council meeting], there are some very interesting backdrops.

“[Cllr Newmark] says every penny counts.

“That will be a phrase that we will come back to and we will revisit when we ask questions of this administration in February.

“For now, I do agree that the local government settlement has not been up to what it should have been.”

When he announced the provisional Local Government Finance Settlement, levelling up secretary Michael Gove said: “Councils are the backbone of their communities and carry out tremendous work every day in delivering vital services to the people they serve.

“We recognise they are facing challenges and that is why we have announced a £64 billion funding package to ensure they can continue making a difference, including through our combined efforts to level up.”

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