Council tax freeze is LGPS members’ lolly

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The council tax freeze announced by George Osborne is being made at the expense of low-paid, local government workers’ pensions

The chancellor’s announcement of a further council tax freeze in 2012/3 comes as no surprise to members of the Local Government Pension Scheme – or those of us involved in discussions over the £900 million ‘savings’ from it demanded by CLG secretary of state Eric Pickles and the Treasury.

For some time now, we have been led to believe that the £900 million is needed to enable councils to cut – or freeze – council tax. That’s why we have been calling the proposed increase in LGPS contributions, a lower pension and later retirement age a ‘tax’ on our members, rather than a measure designed to enhance the sustainability of the LGPS itself.

None of the savings will go into LGPS funds. Instead, the tax will – as has been confirmed overnight – enable councils to reduce their contribution to the LGPS and thereby freeze council tax. If you add to the £900 million tax the £250 million saved on ‘the bins’, then you have your council tax lolly (aka freeze) plus some.

Far from being the result of savings across Whitehall, as the chancellor claimed yesterday, this freeze comes on the backs of LGPS members and this lolly means further cuts to the incomes of the lowest paid public sector workers in local government. They are – it seems – being required to undergo further hardships to subsidise the entire council tax paying community.

Don’t forget – 80% of local government workers who make up the majority of LGPS members earn less than £21,000. None of them received the £250 compensation for the public sector pay freeze which they have endured for two years now. Car allowances have not been increased this year and myriad attacks on pay and conditions are taking place at local level.

Aside from this, let’s just look at who will benefit most from the freeze – aka the chancellor’s ‘compassion’. His announcement assumes a 2.5% increase in council tax. The average CT in 2010/11 is £1,439. So savings in 2012/13 for 5.7 million households in Band A will be £23.98 pence. The 130,000 households in the highest banded properties – H – will each save £71.97 pence.

So guess what? It’s the poor and the lowest paid public sector workers who will pay. Not just through the increase, but through the whacking great hole in council budgets which the freeze will create as a consequence of the gearing mechanism. More cuts and higher thresholds for social care, more cuts to youth services, more cuts to pay and conditions,fewer libraries and more redundancies.

There’s an interesting regional dimension too. Most high band properties are in London and the South East. 261,000 households in Council Tax Bands G and H in London save more than 659,000 Band A households in the North East. That’s ‘compassion’ for many who least need it I think.

About Heather Wakefield

Heather Wakefield is head of the Local Government Service Group of the UK’s largest public service trade union Unison, representing over 700,000 of the union’s 1.4 million members. She was previously a researcher and regional official for the union, and a women’s rights officer for NCCL (Liberty). Heather is a regular commentator on local government and women’s issues.

10 comments on Council tax freeze is LGPS members’ lolly

  1. Thanks for this very informative piece. I had not realised the full scope of the changes.

  2. David says:

    Is anybody surprised at this attack? This is what we expect from a Con Government.

    It’s the LibDems who should be ashamed to be supporting these actions. A coalition was not necessary. A hung parliament should not produce a 5 year fixed term Con Government.

  3. Alan says:

    Heather, your blog suggests that £900 million has been ‘saved’ by the employer at the LGPS members’ expense. You say:-
    ‘For some time now, we have been led to believe that the £900 million is needed to enable councils to cut – or freeze – council tax.’ But in the next para. you seem to contradict this by saying:-
    ‘None of the savings will go into LGPS funds.’ Were you expecting this?
    Maybe I am misreading your posting, but perhaps you could clarify.

  4. roger kline says:

    Excellent piece. Will the Local Government employer pensions negotiators post a response please? Silence will speak volumes.

  5. John Tizard says:

    Heather makes some important and highly pertinent points.

    There will always be an opportunity cost to freezing council tax in terms of what the money required to secure the freeze could have otherwise been used for.

    A freeze cannot be sustained indefinitely and when it is lifted – and when central government stops its specific funding – councils are faced with imposing council tax increases in excess of inflation and/or making further cuts to services and/or employee terms and conditions.

    A populist political trick can have far reaching consequences at the very time when local government, its services and those employed to deliver them are already under severe financial pressures.

    Link this to the unilateral changes being proposed to the LGPS and one can foresee major problems. It will be local government and public service employees and not central government than will face the prospect of addressing these.

    Local authorities should determine their own council taxes and be locally accountable for their actions. I hear few voices calling for council tax increases above inflation but why another freeze other than for short-term political gain? Ministers and councillors should be honest about the implications.This requires comprehensive transparency with clear statements about the consequences of proposed and actual actions. Councils that freeze their taxes should explain to their communities what the long-term implications will be.

  6. Linda Newton-Griffiths says:

    Now come on what did we expect…we the joe bloggs of society have always paid the most into society while the likes of the conservatives and the condems protect the “haves” in our society. The Council Tax Freeze is just the tip of the iceberg. They protect the ones that pay for their political party to exist and thereby, support their causes in return for the protection of their wealth. Trouble is for sometime now we have been seen us as push overs…I am sorry but i really believe we should have done something before now. leopards do not change their spots…I am all for a quiet life but sometimes you have to say enough is enough….

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  8. Derek Green says:

    Great article. This pension hike is a hidden tax on those local government workers in the Local Government Pension Scheme. None of the increase in pension contributions will go into the pension pot. All extra contributions will be used to shore up this government by freezing council tax for another year. But what I and others object to is that this extra tax will be subsidising every household and landlord in the country. Why should council employees carry this burden alone? The council tax should be a universal tax on every household and business, but it would seem that Eric Pickles has singled us out to shoulder all the costs of the council tax freeze.

  9. Barbara says:

    My understanding of the proposed pension change is:
    -that the employees pay an increased amount into the pension fund,
    -the employer reduces his contribution by that amount (thereby the pension fund does not get bigger but the employer contribution reduces),
    -the government will then reduce the amount of the grant to local authorities by the amount the employer saves in pension contributions.

    So government has some spare money, but the myth of changes to make the pension fund sustainable is a lie (mainly because it became sustainable after reforms in 2008).

  10. Richard W says:

    This is nothing less than an income tax rise for public sector workers. If the government had left the employers contribution the same, left local government grant the same, and raised income tax on our salaries, the effect would have been the same.

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