New research has shown that recent proposals to change local government boundaries and create a new Southport council could increase council tax for local residents by a massive 25.7%. Southport Labour Party has uncovered information showing that the last time Sefton’s boundaries were reviewed by the government in 1997 a report from accountancy giant KPMG was commissioned to look at the potential costs of reorganisation. Additional annual and transitional costs at that time were identified by KPMG at up to £3.4m and £2.3m. Accounting for inflation this would translate to a budget gap that could lead to an ongoing increase in council tax of 15.3% plus a on-off increase to pay for reorganisation of 10.4%.
Southport Labour’s parliamentary candidate Liz Savage commented “These figures are admittedly quite old but if anything it’s likely the amounts will have increased. It’s not feasible to come out of Sefton, financially or practically. Quite simply it doesn’t add up and Southport people would be worse off. Again we are seeing evidence of political posturing before an election. It’s not even clear where we would go even if the boundary commission agreed a change. “
Here’s the details of the calculation:
Click here to see an extract from the boundary commission report in 1997 that shows the KPMG figures.
Click here to see details of the council tax requirement in Sefton’s budget.
The document here shows that 36.1% of Sefton’s council tax including precepts is collected in Southport.
2015/16 total council tax requirement = £103.2m
So the approximate total raised in Southport will be 103.2 X 36.1% = £37.26m
Additional annual costs (as per extract) = £3.4m. At today’s prices this equates to £5.70m (http://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflation-calculator-value-money-changed-1900.html)
Transitional costs (as per extract) = £2.3m. At today’s prices this equates to £3.86m
Assuming that in order to secure agreement from the remaining parts of Sefton, transitional costs and ongoing costs are borne by the “new” council:
Ongoing annual cost of 5.7/37.26 = 15.3%
A one-off cost of 3.86/37.26 = 10.4%
Assuming that transitional and ongoing costs are met through council tax, first year increase = 25.7%