Ray Dawe: Raising the price of our services should be a last resort

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We easily forget the economic position of the UK economy just four years ago. Stephanie Flanders, the then BBC economic editor asked, ‘Are we still climbing uncertainly out of the 2008-9 recession, or heading for a new one?’.

She was commenting on a fall in GDP saying the figure was worse than had been feared. Meanwhile, the services sector, which accounts for two-thirds of the economy, had ground to a halt. That came as the governor of the Bank of England said that the UK faced an arduous path to economic recovery.

And now four years on the British economy has been given a resounding thumbs-up from a leading international think-tank which has urged the country to continue on the current path and retain its place as one of the fastest growing economies in the developed world.

In its latest economic survey, the OECD said UK growth would reach 2.6pc this year, making Britain the fastest growing economy in the G7. ‘The United Kingdom has made tremendous progress exiting from the worst economic crisis of our lifetime,’ said the OECD. ‘Job creation is remarkable and growth is strong, but the UK has to finish the job’. The current government has promised to eliminate its current budget deficit by 2017-18. Should they be elected, the Conservatives have also vowed to introduce a ‘balanced budget rule’ to run surpluses in good economic times.

This contrast in the national economic picture featured in our recent Horsham District Council annual budget meeting. It was pointed out that four years ago the council too faced difficult decisions, knowing in particular that funding from the traditional source of government grant was going to be heavily reduced as the government tackled the huge deficit it had inherited. Today, this has not changed and experts are predicting that by the end of the next four year period all council direct grant from government will have disappeared, meaning we are likely to be entirely on our own as regards paying our way.

In our budget debate, it was good to note that the District Council too has a much more pleasing economic outlook from four years ago and we have been able to share this with all our council taxpayers who have benefited from a council that has maintained things like weekly dustbin collections and all other major services but has still given us the lowest council tax in West Sussex. Including green waste charges, themselves the lowest in West Sussex, the average home (band D) in the Horsham District pays £164 pa in tax for district council services - two thirds of the average of £244 for the rest of West Sussex.

An argument made by some political opponents over the past four years has been that we should increase council tax as this gives us an automatic increase every year and builds up reserves. While I have no ideological objection to raising council tax, I don’t really follow the argument that we should increase council tax every year. Council tax is the price of the services delivered by Horsham District Council. We have a duty to keep this price as low as possible given that we are usually a monopoly supplier of these services. Raising the price of our services should be a last resort and instead we should seek to reduce the cost of providing our services by continuing to seek better ways of doing things. We have been doing this by increased productivity.

Going forward, we look to be in a healthy financial position. However, we do not have the security of knowing government policy after this May’s election. An incoming government could, for example, escalate withdrawal of financial support or limit other means of our earning an income. So we have said that for the moment we remain prudent about spending any reserves until we have more certainty. Once we know more we can plot the way forward. This then brought the comment from our political opponents of ‘squirrelling the money away’ saying that we should be spending money on new projects. I leave it to the voters to decide which course they prefer!