Cameron proposes a referendum for council tax

Councils should hold referendums if they want to bring in "high" council tax increases, says Conservative leader David Cameron.  If people voted against a rise, they would get a rebate the following year, he said.  This would replace the current system of central government "capping" bills in England and Wales.

But Communities Secretary Hazel Blears said the proposal was "just another empty David Cameron gimmick".

Under the proposal, which was outlined in a speech in east London, there would be a "trigger threshold", above which councils would have to hold a referendum.

In England this would be set by Parliament, with the Welsh National Assembly deciding the level for Wales.  Bills sent out to households would ask whether they supported any "excessive" increase, with a referendum form attached.

Mr Cameron told BBC Radio 4's Today programme: "It's a lot better than capping. Capping is a minister sitting in Whitehall and deciding how much increased tax councils can put forward and literally legally banning councils from going beyond that level."

He said capping, introduced by Margaret Thatcher's Conservative government in the 1980s, had been necessary at the time to deal with "some very left wing councils" trying to "fleece" their residents.

But he said things had changed and he wanted councils now to have more control and freedom to respond to local circumstances, while offering residents a guarantee that council tax levels would not spiral.  He added: "Yes it would mean in many cases that councils would not be able to increase tax because people wouldn't want that to happen but I think it's right to give people the ultimate say."

He could not say how often it would be used, but stressed: "That's the whole point of more local control, more local discretion, different councils will do different things."

In his speech Mr Cameron said all governments end up centralising power, but added: "I want to prove that we will be different. That we really mean it when we talk about localisation.

"That's why I am announcing today a significant new element in our policy platform: the democratisation of council tax."

Local government expert Tony Travers, of the London School of Economics, told the BBC he thought it would not be "very different" from capping as many councils would simply spend up to the upper limit.

He said it was a "limited reform" but not a step back "to the world where councils were themselves allowed to set their own taxes unimpeded, and that shows just

how salient, how politically dangerous the issue is still seen by his party and by the government".

The government has previously considered forcing local authorities to hold referendums if they propose council tax rises double the rate of inflation.  And some local authorities - Croydon, Milton Keynes and Bristol - have trialled council tax referendums in the past. In Croydon and Bristol residents voted for the lowest possible rise in council tax.  

A spokesman for the Local Government Association said that voters were already able to vote against rises in council tax - via the ballot box in local government elections.  Councils should be freed from all Westminster interference when setting the tax, he added.

For the government, Ms Blears said: "Any local council can hold a local community vote on the level of council tax increase, and some of them already do.... You don't need some new law."

She accused Tory councils of driving up levels of council tax and cutting local services.  Acting leader of the Liberal Democrats Vince Cable said: "The Tories have no credibility left on reforming the unfair council tax."

Light touch performance regime for flood hit councils

Local Government Minister John Healey has announced plans to ensure that councils severely affected by this summer's floods will not be unfairly penalised through their performance rating system.

Well performing councils can enjoy financial rewards, greater freedoms on spending, and wider powers to raise funds by trading services that can be used to improve services or reduce council tax bills.

John Healey described the new approach set out in a statement of principles, saying that central Government and the relevant inspectorates will recognise the unusual strain placed on severely affected authorities and would be able to use common sense where the evidence clearly shows a temporary dip in performance against a previously improving trend to ensure that the authority is not unfairly penalised.

The common sense approach to assessing the performance of authorities worst hit by the floods will ensure that they able to focus on the recovery effort and are not overly burdened by performance requirements during this time. The new approach was set out in a statement of principles published today.

Local authorities were central to the response and recovery operations for the floods which caused widespread damage to homes, businesses, and key public services. With 48,000 homes affected and high levels of contaminated waste, some councils may struggle to meet key service targets such as waste collection, recycling and decent homes.

John Healey said it would be unfair to penalise authorities for temporary dips in performance caused by the floods. But equally that wholesale changes to targets would not be appropriate or what local people would expect given the Government's determination to see all councils improve and reform public services.

While on a visit to Hull to get an update on the flood recovery work taking place John Healey said:

"This summer's floods caused misery for thousands of people with widespread damage across large parts of the country. Thousands of homes and businesses were affected with further damage to schools, roads and other public buildings.

"Local authorities, working with emergency services and other agencies, responded magnificently under very difficult circumstances. Government has provided up to £57million to support the local recovery operation so far - and more financial help will follow.

"But we recognise that we can also provide support in other ways. It is important that national performance requirements on local authorities do not act as a barrier to the process of getting their systems and services back in place following the floods. Some councils have raised this concern with me so I am ensuring we take a common sense approach so we do not penalise authorities for temporary dips in performance resulting from the flooding.

"However at the same time I want councils to be absolutely clear that we continue to maintain momentum on existing service improvement, so I will not simply change the targets as some have suggested, especially given we are introducing the new performance framework and indicator set over the next year. So this is about striking the right balance between fairness and delivering better services for local communities.

"We want the process for agreeing flexibilities to be transparent and clear, as much for the benefit of those local authorities not affected by the flooding as those who have been. It also needs to be responsive and flexible, with minimum bureaucracy, while remaining consistent and fair across regions."

The Audit Commission are working with Government to use their consultation on Comprehensive Performance Assessment methodology in the New Year to outline the approach they will take for flood affected areas. They have confirmed that they will be sensitive to the affects of the floods in assessing the performance of local authorities in severely affected areas. The Audit Commission have stated that they are willing to allow some flexibility but they also need to ensure that their methodology is clear and consistent.