Archived decisions

CABINET/LEADER

PART II

LOCAL GOVERNMENT ACT PART 6 - (COUNCIL TAX PROVISIONS) - CONSEQUENTIAL REGULATIONS AND DIRECTIVES - A GOVERNMENT CONSULTATION PAPER

1. The Government has responded to a Government Consultation Paper on draft regulations and directives that will give effect to Part 6 of the Local Government Act. The consultation exercise did not relate to the policy behind the provisions of the Act.

2. In general the regulations appear to achieve the intended objectives of the legislation, but two particular areas, council tax on second homes and the power of billing authorities (district councils) to fund any locally determined discounts which they might wish to create, are worthy of further comment and are dealt with in the succeeding paragraphs.

3. As regards council tax on second homes, the regulations allow billing authorities to reduce the discount on the tax for prescribed classes of dwellings from the present 50% to 10%. The additional council tax increase will be retained by local authorities proportionate to tax base and the County Council would share the extra resources with the district councils and the Police and Fire Authorities. The regulations now propose that any reduction in the second home discount would be reflected in the tax base used to determine council tax and automatically shared between different tiers of local authorities. Accordingly, there is no requirement to identify this element of the council tax base separately, or to propose any special arrangements for determining how any additional incomes should be used. In 2002, the County Council decided to develop a protocol with the district councils on the issue and this exercise will need to be refined in the light of the publication of the regulations. It remains the case that the decision to reduce second homes discounts will benefit the County Council financially much more than each individual district council. Unless the district council has strong policy grounds for wanting to reduce second home discounts, it may not have the financial incentive to do so in the absence of a protocol which gives the district council some influence over how the County Council's share of the additional income is spent. Further reports will be brought to the Cabinet as discussions with the districts proceed, but it is unlikely that the situation will crystallise in time to have an impact on the 2004/05 budget-setting process.

4. The new regulations also allow additional discounts on an individual, or class of dwellings, basis. The district council would meet the cost and it could not be passed on to the County Council. Whilst the Cabinet has noted this provision, it remains firmly of the view that the Government should accept its responsibility for the projected 7% council tax rise in Hampshire because of its national spending priorities and because of its reduction in grant for Hampshire, and that it should assist those pensioners, families and individuals who find it increasingly difficult to meet future council tax rises.