Answers to frequently asked questions
1. Why is the council’s Band D council tax above the national average?
Firstly it must be stressed that inter authority comparisons are largely ineffective because each authority has different needs, varying levels of government support and also varying types of property, all of which distort comparisons.
National figures for 2008/09 are not yet available but for 2007/08 the headline Band D council tax charge for Salford’s residents is the 61st highest in the country. Whilst this is not a favourable position it should be noted that the placing has improved every year since 2000/01 when we were positioned at 3rd highest.
However, Band D is merely a reference point to determine the tax for all other bands. The majority of properties in Salford are within the lower valuation bands and a more meaningful comparison would be based on the average council tax per dwelling for the area. Using this basis the charge to Salford’s residents is 309th highest or within the lowest 13% of the 354 authorities.
The council is committed to keep council tax rises to a minimum. A key priority of the financial objectives included within the council’s financial strategy is that council tax rises are to be no more than 3% per annum for the council’s services. The council’s commitment to this policy is endorsed by the fact that the increase in each of the last four years has been 3%.
2. Why have past council tax increases been higher than the rate of inflation?
Almost 59% of the council’s revenue budget is funded from Government grants. This is in addition to the funding for schools, which is provided by the Government from a dedicated schools grant. The amount of Government grant is determined by what the Government can afford to spend allocated to authorities on the basis of the Government’s assessment of its spending needs. The council has always argued that the system that the Government uses to allocate its grant is not suitably responsive to accurately reflect the needs of the council.
It should also be noted that the system the Government uses to calculate the distribution of its financial support to authorities is determined wholly by an assessment of perceived needs using a number of complex criteria. Under these arrangements the council would be entitled to additional grant of £3.5 million in 2008/09 however, the Government has clawed this amount back to allocate to other authorities to ensure that each authority gets a minimum 2% increase in its funding.
Council tax therefore funds only 41% of total council expenditure. This means that every £1 spent above the grant paid by the Government falls wholly on council tax payers. This is known as the gearing effect because every 1% budget increase more than Government funding means an extra 2.4% on council tax. The council has little or no influence on the amount of government support it receives.
The level of Government grant support in 2008/09 has fallen short on what local government was seeking and indications for 2009/10 and 2010/11 are for even tighter settlements from the Government. We believe that the level of grant is insufficient to meet the growing demands on services, in particular children’s and care related services.
3. Why is there no rebate for people on pensions?
Currently there are only a very small number of local authorities that apply a pensioner council tax rebate scheme. Many local authorities have considered the possibility of adopting such a scheme and legal advice has been sought on its eligibility. A leading Queen's Counsel warned that although a pensioner rebate scheme would be within the law, there would be a risk of legal challenge from other groups seeking a discount. Generally local authorities have reluctantly decided not to take further the plans to introduce the scheme.
It should also be stressed that many pensioners and pensioner organisations have said that although they do need financial help, this should come from the government and not from other local residents, who would face an increased council tax to enable pensioners to receive special help. The council will continue to monitor the position and consider the implications should a scheme be considered feasible.
4. Why should I pay extra for non-collection from others?
Whilst it is the intention of the council to keep the level of non-payment to a minimum possible by the efficient use of collection procedures, it is not possible for this or for that matter any large organisation to collect 100% of its charges.
Regrettably the amount most of us pay for national taxation, gas, electricity, mortgage, rent and virtually all goods and services has to include an undisclosed amount in respect of the non-payment by others.
The council does not knowingly accept non-payment from any of its council tax payers. Rigorous collection procedures are in place including the use of court proceedings, bailiffs, attachment to earnings and ultimately a custodial sentence. The collection of outstanding amounts will be subject to these measures.
5. How much do I pay to cover the non-payment of others?
By legislation the council is required to calculate and collect the level of council tax sufficient to cover its budget needs after allowing for government contributions.
The net amount required is then divided by the council tax base, which is basically the number of chargeable dwellings in the city. The tax base is calculated in accordance with Government regulations and it includes an allowance for non-collection that for 2008/09 is 2% and adds £28.67 to the charge for a Band D Council Taxpayer.
In addition each year the council reviews the actual level of collection and compares it to that anticipated in the budget. A surplus collection will reduce future council tax levels whilst a shortfall will increase council tax levels. A review of the collection rates for the 2008/09 budget process shows that a surplus collection is likely to occur by 31st March 2008 and a surplus has been declared. This has been used to reduce the amount required from council tax by £0.884 million in 2008/09.
6. Why should I pay for services I don’t use?
The council provides a wide range of services and undoubtedly all benefit either directly or indirectly from a large number of these services. And the extent to which residents benefit can depend on their circumstances, e.g., age, health, finances.
Council tax is after all a tax and not a charge for service and the method of setting the tax is governed by legislation to ensure that each council tax payer is contributing to the cost of all services.
It should be noted that it is the net cost of services that is covered by the council tax and this is after taking into account income received from users of specific services, e.g., leisure centres, planning applications etc.
7. Where can I obtain further information about the council’s finances?
If you have any further questions about the revenue budget or the council’s finances in general please email council.finances@salford.gov.uk or call 793 3245.
This page was last updated on 18 April 2008
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