IFS questions Tory council tax plans

Author: Local Government Chronicle - Mar 3, 2010

When George Osborne revealed Tory plans to freeze council tax in 2008, he lit the touchpaper on a debate which shows little sign of abating nearly two years later.

A vicious row over the numbers ensued; both in terms of how much the freeze would cost and where the money to fund it would come from - advertising and consultancy budgets, the Conservatives claimed.

In January, ministers claimed Treasury figures proved there was a black hole, worth hundreds of millions, in the shadow chancellor’s plans, while the Tories said their estimate, that the policy would cost £1bn in its second year, had been signed off by the impartial and well regarded Institute for Fiscal Studies (IFS).

The story moved on this week with reports that Treasury officials had quietly corrected its figures for how much the freeze would cost – a move which seemed to undermine Labour’s credibility in the row and delighted the Tories.

This has now been followed by an IFS paper which concludes that while both parties can legitimately twist the figures to suit their own ends, the "couple of hundred million pounds involved is negligible when compared to the multi billion fiscal repair job need".

But, putting the numbers to one side, the IFS also uses the paper to put the Tories’ overall policy under the spotlight; raising questions both about the equity of the policy and how comfortably it sits with the party’s localist agenda.

"The Conservative Party have not announced plans for long-term reform of council tax," the paper states, "and they are also opposed to a revaluation, which would make the tax fairer by being more closely related to current house prices.

It adds: "The policy represents a small shift in the balance of funding away from local authorities and back towards the centre, which seems hard to reconcile with a desire for more localism in policy-making."

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