Every penny of extra millions raised by council tax hike will be swallowed by inflation
Inflation will totally wipe out the extra tens of millions Northamptonshire residents will pay for council services
By Sarah Ward
The proposed extra levy on Northamptonshire residents to pay for unitary council services will not even cover the cost of inflation on existing contracts.
NN Journal has carried out an analysis of the budget proposals being put forward by the county’s two Conservative led unitary councils for the upcoming year and found that all of the estimated £24m that will be raised from local taxpayers by increasing council tax bills will be swallowed up by contract inflation on existing services.
Currently inflation in the UK is at 10.1 per cent and many of the councils’ large contracts are linked to inflation. Collectively inflationary costs for both councils total around £32m.
In the west of the county the unitary authority is planning to impose a maximum five per cent rise on council tax, which it estimates will bring in an extra £15.4m to its income and help make up an overall budget of £377.1m.
But council papers reveal the cost of inflation on existing contracts is £19.1m, with the bulk of the inflationary costs (£10.2m) related to adult social care placements and domiciliary care and day care provisions. Other large contracts for waste collection, school transport and street light maintenance have also equalled £5.7m in inflationary costs.
The authority will make a decision on its budget for next year at a special meeting this evening. It can be watched live from 5pm and alternative budgets will be put forward by the Labour and Liberal Democrat groups.
In North Northamptonshire the authority estimates the extra five per cent levy for services will bring an extra £9m into the authority. However inflationary costs on existing adult social care contracts alone total just over £8.3m and council papers refer to a further £4.6m in inflation costs on contracts in the highways and place department. The cost of inflation to its waste management service is £1.54m.
The full council of 78 members will take a vote on the £336m budget tomorrow morning at 10am and can be viewed live.
Like all local authorities, the unitary councils, which will begin their third year this April, are signalling hard times against the backdrop of inflation, a post Brexit era and the war in Ukraine. But this year’s increase comes amid the current cost of living crisis, which is seeing many already unable to afford the day-to-day bills.
As reported by the Guardian the majority of top tier councils are proposing to raise council tax by the maximum amount, with only Central Bedfordshire Council deciding to freeze bills.
Local authorities were already in a perilous state pre-pandemic, with the issues of rising adult social care costs and children’s services, many of which are provided to private contractors, putting huge pressure on the budgets of other departments and the services the councils can offer. The independent Northamptonshire Children’s Trust, which manages children’s social care is currently predicting a £12m overspend this current financial year.
Former Liberal Democrat councillor Chris Stanbra, who for many years pored over the budgets of the former Northamptonshire County Council with a fine tooth comb, said it was a personal bugbear that local government builds in inflation to long term contracts.
He said:
“We are having the maximum council tax rises that the government allows and all we are getting is cuts and inflation on contracts the council has already agreed.
“We as taxpayers are picking up the inflation cost, and I don’t think the councils are playing fair by us and getting the best price.”
We asked both councils about their policies regarding contract inflation and whether paying existing contractors inflated prices was a good deal for the taxpayer.
West Northamptonshire Council said:
“It is normal to have inflationary uplifts to recognise that the value of money changes over time, and this is particularly the case for longer contracts. Contractors would be unlikely to agree contracts without such provisions.”
It said contractors were negotiated and agreed on a per contract basis and disagreed that inflation linked contracts were a bad deal for taxpayers saying ‘major contracts go through a formal procurement process which assess and award on a variety of factors, with value for money as one of the key considerations.
Seven days since the initial enquiry to its media office, North Northamptonshire Council has not responded.
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Where are the savings from splitting into two unitary councils?