This year the government is making available an extra £650 million to help principal local authorities to freeze council tax. In the last 10 years council tax has almost doubled across the UK, yet many residents have not seen a corresponding increase in the services they receive.
Many households are feeling the squeeze with rising bills and an increase in the cost of living, so this freeze will be a welcome relief.
Some councils have managed to go one better and provide a cut, Windsor and Maidenhead announced yesterday that they will cut council tax for the third year in a row.
There are many pressures on council budgets and delivering a cut or a freeze won't be easy, but there is one area where huge savings can be made, which could then be passed back to Council Tax payers: employer contributions to the Local Government Pension Scheme (LGPS).
A new report published today by the TaxPayers' Alliance reveals that £1 in every £5 of council tax raised in the UK is spent on council pensions. In total taxpayers contributed over £5 billion to these pensions in 2010-11 via employer contributions. There has also been an explosion in the number of councillors who are enrolled on these schemes, in some areas to public outcry:
More than 4,500 councillors are enrolled in pension schemes at the authorities where they serve. And that numbers is rising, even though serving on a council has traditionally been regarded as a voluntary activity and not a job. In fact, there are over 1,000 more councillors on the Local Government Pension Scheme than there were in 2007-08, and their employer contributions are paid for by taxpayers. They will be guaranteed pensions based on the allowances that they receive and it is taxpayers who are on the hook to pay for these in years to come. The fact that many local authorities consider incidental expenses to be pensionable pay calls into question the voluntary nature of participating in local government.
It simply isn't fair that ordinary families and pensioners, who have seen council tax bills almost double in the last decade, have so much of their money spent on council pensions. These gold-plated, final-salary retirement deals have all but disappeared in the private sector and it simply isn't sustainable to keep the system as it is. The Local Government Pension Scheme must be reformed. Reducing the cost of this scheme going forwards would mean less money from council coffers being spent on pensions and more left over to spend on services or provide a greatly needed council tax cut to millions of households across the UK.