Rochdale leaders have been urged to scrap plans for a 3pc council tax hike as fears grow over the looming cost of living criss.
Budget proposals for the 2022/23 financial year would see an average Band D household in the borough paying an extra £45 per year to the council for general services and adult care.
The rise - which goes up to 3.62pc when Andy Burnham’s mayoral precepts are taken into account - is due to come in from April, pending approval by the full council.
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It comes after the government handed local authorities a one-year ‘funding settlement’, increasing their potential spending power by 7.4pc - if they raise their council tax by the maximum permitted without a referendum.
Local government chiefs say this gives authorities little choice but to raise council tax in order to set a balanced budget and continue delivering vital frontline services.
But Councillor Michael Holly, the Conservative chair of council’s corporate overview and scrutiny committee, has called for a freeze on council tax in Rochdale.
He told a meeting of the committee that it was time to use monies from the councils balances - set at £17m next year - and reserves to plug the gap.
“I have to say, if these balances were used in the private sector- or for that matter the NHS, as there are different accounting rules - none of them would be allowed because there isn’t a constructive liability there,” said Coun Holly.
“It’s there for a rainy day, but things never seem to change - the roof never falls in.
“If we had not had a difficult time where balances, in particular, would be utilised, if the last two years aren’t it, I don’t know what would be.”
Coun Holly said he was 'really worried' about the increase ‘in this of all years’, given soaring energy bills, rising inflation and the possible impact on interest rates.
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“You can see that building up for our residents and for some people £100 here, £200 there is a lot of money,” he said.
“I really do believe that we should look at this again.
“And, if at all possible, I really do believe we should be freezing council tax, to give everybody a benefit.”
The Norden ward councillor said he was not sure it would be possible, due to the council tax reduction scheme, council tax support scheme and hardship fund which all form part of the budget.
“Whether or not that can be done with all the other rebates and so on as you are almost getting two or three bites of the cherry,” he said.
“But it does concern me that there never seems to be a time that those reserves and balances truly are utilised.”
While accepting reserves were more widely used than balances, he said the total sum was ‘quite staggering’.
Julie Murphy, chief finance officer, said the council’s approach had stood it in good stead over the last two years.
And she told the meeting she saw no reason to change this until there was more certainty on government funding in the longer term.
“When we started the pandemic in the early stages, that placed us in a really strong position to be able to react to the pandemic, knowing we had those balances,” she said.
“We have no funding in our certainty beyond next year. We had a one-year settlement from the government and so any funding beyond that we don’t understand.
“That’s the reason we hold on to those balances until we have a little more certainty over the level of funding that we will receive.”
However, she pointed out that £4.4m had been transferred from reserves into the main budget to help ‘smooth out the impact of Covid on some income streams’. A further £3.4m was also made available for targeted council tax support and the discretionary crisis fund.
“That’s the use of £8m of funding within this budget that’s proposed, which is a significant sum of money.” she added.
Ms Murphy said the money held in balances was not a ‘huge figure’ in terms of the council’s overall spend.
“If you take it as a percentage of our gross spend, it’s 3pc and that’s not a huge amount to have in your bank account if something happens unexpectedly,” she told councillors.
“As much as I understand Coun Holly’s viewpoint, I think it’s the right reason to keep those balances at the level they are in line with the report.
“It’s recommended they remain there until we have more financial certainty and truly understand the long-term recovery from Covid.”
Rochdale council’s Corporate Overview and Scrutiny Committee met on Thursday night (February 17) at Number One Riverside.
