Northumberland councillors discuss impact of any changes to council tax system

North East leaders have called for a ‘fairer deal’ for the region after reports new Prime Minister Andy Burnham could make big changes to council tax.

It was suggested that the system could be replaced with a flat 0.48% tax based on property values, although Downing Street has since denied that the Prime Minister is actively considering replacing the charge.

There has long been complaints that the council tax system in its current guise unfairly hits the pockets of those living in more deprived areas. Hartlepool Labour MP Jonathan Brash has been among the most vocal critics, pointing out band A homes in his constituency are charged nearly 2.5 times more than the equivalent property in Westminster.

At Northumberland County Council’s audit committee, members discussed how the proposal could impact Northumberland.

While it was acknowledged that many residents could benefit, there was concern that the council may see a reduction in funding as a result.

Conservative councillor Mark Swinburn said: “With the recent change in Prime Minister, there has been discussions and rumour about a potential change to council tax and that it could become a property valuation based on 0.48% of property value. If that does change, there will be a considerable number of people across the North East who would benefit from that.

“However, the council is funded from the council tax system, and although individuals would benefit from a potential change, that would result in a considerable drop in income at the council.”

Cabinet member for finance Cllr Nick Oliver praised the work of Mr Brash in Hartlepool but said the council would push back on any proposals that could see the amount of money it brings in reduced.

He said: “The Government is expecting the finances of Northumberland County Council to rise by £102 million in three few years, but 80-odd percent of that comes from council tax rises.

"My guess is that the Government would be mindful of the fact that whatever changes it would make to the system and any reduction in their contribution and any onus put onto a local authority would make that 80% higher – that would be a political decision that they would have to make.

“I can’t second guess what the Government might do on that. We obviously would respond in the strongest terms if there was any attempt to reduce the council’s funding.”

Jon Ritchie, the council’s head of finance, suggested the new system would have to work in a similar manner to the way business rates are collected. Under this system, money is collected locally and some is retained while the rest is shared out across the country.

However, Mr Ritchie also said there was no work ongoing at the council as there were “too many unknowns”.

He said: “For a system that has been in since 1993, this would be a fundamental change to the funding. We’re not doing any detailed modelling because we don’t know any more than what is being talked about in the press.”