TAXPAYERS in Warwickshire would avoid severe council tax hikes if the county is run under two unitary authorities instead of just one, say district leaders.
Warwick District Council leader Andrew Day, and Stratford District Council leader Tony Jefferson have warned a report from Deloitte showed residents in south Warwickshire could be hit with a big council tax rise if a single unitary authority was created.
The report recommends creating two unitary authorities instead, one for the north of the county including North Warwickshire, Nuneaton and Bedworth, and Rugby, and one for the south, running Stratford and Warwick.
The leaders say this would result in better value for money for taxpayers across the county.
Coun Day said: “The report makes it clear that having a single unitary authority controlling the whole of the county would mean residents in the south would have to pay far more than they do now in council tax.
“If two unitary authorities were created instead, residents in both Warwick and Stratford Districts would avoid a steep rise in council tax, and would still benefit from the savings made by getting rid of the old system.
“Residents in the north of the county would not miss out either – having two authorities or one would make little difference to their council tax payments.
“This means the fairest option for taxpayers across the whole of the county is to have two unitary authorities instead of one.”
While creating a single unitary authority would result in more savings to running costs, the council tax system must be overhauled in a process called ‘council tax harmonisation’, which can create problems.
Currently, households in different districts and boroughs pay different amounts even though their houses are in the same tax band.
For example, the lowest Band D value in south Warwickshire pays £144 to their district or borough council, whereas the highest Band D value in the north of the county pays £239.
If one authority was to control the whole county, it is likely it would choose to base its council tax system around that £239 figure to avoid missing out on income.
As south Warwickshire’s council tax is currently much lower than the north’s, there would be a big rise in council tax for those living in the south when the tax is ‘harmonised’ across the county – and the process could take a decade.
Splitting the county into two unitary authorities would mean this effect is drastically minimised, as Band D households in Stratford and Warwick districts pay similar amounts in their precepts compared to in the north.
But if a new single authority instead chose to ‘harmonise’ council tax around the lower £144 figure – resulting in a tax cut for the north – the report shows this would result in an enormous loss of income – meaning creating a new authority would be pointless.
And harmonising council tax at a figure in the middle would still result in South Warwickshire having to pay more.
Coun Jefferson added: “While creating a single authority could result in marginally more savings for a new council overall, it can create more problems than it solves because of this process of harmonising council tax.
“Savings will be crucially dependent on leadership and management having the capability to deliver. Promises are easy to make.
“A two unitary solution will mean council tax is much fairer for all taxpayers.
“While we strongly believe this is the best option for the county, we will await the results of the consultation with residents, local businesses and other partner organisations on what they think of the potential options now it is clearer what the council tax and wider financial implications may be, before reaching a conclusion.”