Review of Council funding "Long Overdue"

The Leader of Herefordshire Council has welcomed proposals for a radical reform to the way Council Tax is raised.

However, while Cllr Roger Phillips says the review is “long overdue,” his enthusiasm is tempered with concern that it could cost Herefordshire dearly if the proposals are not thought through extremely carefully.

Calls for the review of local authority funding have come from the organisation which represents the interests of local authorities in the UK, the Local Government Association.

It has put forward a package of changes which would mean less funding for local authorities, such as Herefordshire Council, coming from Central Government with more funding being raised locally.

Currently the majority of Council funding comes from Central Government – only a third is raised locally via Council Tax.

However, while the concept of local money paying for local services is welcome by Cllr Phillips, the proposal to raise money locally through, for example business rates or a local income tax, could backfire on a rural authority like Herefordshire which does not have a massive industrial base.

“I recognise the impact that Council Tax has on the household budget, particularly those on low or fixed incomes,” said Cllr Phillips

”Something will have to change. But I’m extremely concerned about the impact these proposals will have on a low-income, rural authority like Herefordshire,” he added

According to the LGA, nationally only 26 per cent of local authority funding is raised locally with the remaining 74 per cent coming from Central Government.

Under the proposals unveiled last week, this would be virtually reversed, with 28 per cent from Central Government and 72 per cent raised locally.

Herefordshire Council, with an annual budget of £169 million, receives 63 per cent of its funding from Central Government and just 37 per cent is raised locally.