From Mike Bomford, Exeter 382173, January 02, 2008

A JOINT New Year's call urging Government to reform Council Tax has been made by Devon County Council and the Devon Pensioners' Action Forum.

The two organisations are joining forces in calling on Ministers to look again at the case for reforming the current Council Tax system and replacing it with local taxation based on people's ability to pay.

The joint call for action comes as the County Council embarks on the painstaking process over the next seven weeks of consultation and preparation for a new budget for Devon in 2008/9.

Both organisations said today they shared a common concern about the impact that the current local government finance system has on low income households and a common desire to see the system reformed.

The Lyons Inquiry review of local government concluded that whilst Council Tax was not "broken" it was under tremendous pressure and in need of reform.

That point is underlined by the Government's provisional funding settlement for Devon for 2008/9 which offers a 7.5% increase in Government grants to support county council services in Devon, but yet leaves the county's overall funding position largely unchanged.

The amount of Government grant Devon receives is the biggest influence on how much Council Tax will be required to help pay for local services such as roads and social care.

The Government's proposed 7.5% grant rise for Devon has been welcomed by the County Council. But that has been off-set by a rise of just 3.9% in Government funding for Devon's schools which leaves the county the 146^th worst funded of 149 Local Education Authorities in the country.

The overall result has therefore seen little change in Devon's funding position with the county on course to receive £48 per person less Government funding than even the average for English counties. This would amount to a massive £36 million a year less grant coming into the county to support public services.

Commenting on Devon's funding position and the need for reform, the Leader of Devon County Council, Brian Greenslade, said: "I welcome the support of the Devon Pensioners' Action Forum which has done so much to highlight the case for reform. We are united in our desire to achieve a fair and just system of funding vital public services which is based on people's ability to pay and the true cost of providing those services in our communities."

Cllr Greenslade explained: "The reality for Devon is that while a better than expected grant settlement proposed by Government is welcome, it cannot paper over the fundamental inequalities in the current system of funding local government, nor can it disguise the fact that Devon's schools are not receiving fair funding.

"Many Devon people on low and fixed incomes, particularly those at the margins of eligibility for benefits support, are facing double trouble under the present system. They are unfairly penalised because their public services do not receive a fair share of Government grants and that also places an unfair burden on their Council Tax.

"The problem is that Council Tax is fundamentally flawed being based on property values instead of people's ability to pay. In a county like Devon with high house prices and low income levels, especially with so many on fixed incomes, the ability to pay Council Tax bills is very difficult for many.

"That's why we are urging the Government to scrap Council Tax in favour of a system of local taxation which recognises ability to pay. But this must also be supported by reform of the grant distribution system to ensure fair treatment for Devon. "

Colin Hadley, Chairman of the Devon Pensioners' Action Forum, said: "Government Ministers need to wake up to the harsh realities of trying to pay Council Tax when you're on a low or fixed income. It may not seem a crisis in Whitehall, but it is very definitely a personal crisis for the people who are struggling to make ends meet and may not be eligible for benefits.

"We are joining forces with Devon County Council in an effort to get the Government to really take this problem seriously. Whitehall has been steadily shifting the burden of paying for council services from national taxation to Council Tax to point where it has become punitive for many pensioners and those on low incomes.

"The problem is acute in areas such as Devon which has received relatively low levels of Government grant to support council services, but is mistakenly perceived by Whitehall to be a wealthy area because of house prices and therefore able to pay more in Council Tax.

"This cannot continue and we need to hear Ministers committing the Government to real and urgent reform."

Although the Government's actual funding settlement will not be known until later this month, Devon County Council's Executive Committee today agreed a 'target budget' based upon the Government's provisional figures.

Cllr Greenslade said: "We're not in the position today to complete the capital programme for the new year, but we expect it to be the largest the county has ever seen. Our targets see year on year rises for the next three financial years in funding for services for adults, children and young families, roads and the environment.

"Clearly though, we still have stringent funding difficulties in Devon. The current Council Tax system does penalise people in the county, which is why we and the Devon Pensioners Action Forum are calling on Ministers for reform."