Commentary Part 7 – Miscellaneous and Supplementary Section 41: Council tax referendums
141.This section amends Chapter 4ZA of Part 1 of the Local Government Finance Act 1992 to include the cost of levies within a billing or major precepting authority’s calculation of whether its council tax is excessive, and so requires a council tax referendum to be held. In effect, this amends the meaning of ‘relevant basic amount of council tax’ which is the primary trigger for council tax referendums from the previous definition which excluded levies, to one that includes levies. This latter definition is also known as the ‘basic amount of council tax’, and is the amount that people see on their council tax bills.
142.Each year the Secretary of State may set referendum ‘principles’ for categories of authorities. One of the principles must be a comparison between the ‘relevant basic amount’ of council tax set by an authority in the relevant year, and that set in the preceding year. Previously the ‘relevant basic amount’ was essentially the Band D council tax set by the authority but adjusted to exclude any precepts issued to the authority and any levies received from a wide range of bodies.
143.The amendment made by subsection (2) requires a billing authority that has set an excessive increase and triggered a referendum to notify any body that has issued a levy or special levy to it.
144.The amendment made by subsection (3) requires a billing authority to notify any body from which it received a levy or special levy of the result of the referendum.
145.The amendments made by subsections (5) and (8) replicate these provisions for major precepting authorities (including specifically the Greater London Authority).
146.The amendments in subsections (6) and (7) are minor consequential amendments related to subsections (5) and (8).
147.The amendments made by subsections (9) to (13) change the definition of ‘relevant basic amount of council tax’ for billing and major precepting authorities (including specifically, in subsection (13), the Greater London Authority) so that it now includes any levies issued to them or anticipated by them. The relevant basic amount will continue to exclude any precepts issued to billing authorities, as precept-setting bodies are individually and separately subject to the referendum legislation.
148.The amendments made by subsections (14) to (21) provide transitional measures for the years beginning 1 April 2014 and 1 April 2015. Subsections (15) to (17) and (19) to (21) are mutually exclusive, so that only one set of provisions can have effect. The trigger for determining which provisions will take effect is whether in accordance with section 49(3) the section came into force at Royal Assent or comes into force subsequently by order. As the Act received Royal Assent on 30 January 2014, this section came into force on that day, so that subsections (15) to (17) apply rather than subsections (19) to (21).
149.Subsections (15) to (17) make provision in relation to the referendum principles that the Secretary of State may set for the financial year beginning 1 April 2014. Specifically, they allow the Secretary of State to determine a category of authority on the basis of whether its relevant basic amount of council tax for the financial year 2013-14 would have been excessive if the relevant basic amount in that year and 2012-13 had been calculated in accordance with the newly-amended legislation. In short, this explicitly allows the Secretary of State to consider the impact of previous levy increases when setting referendum principles for the financial year 2014-15.