A Labour councillor has accused the district council of “gambling” to avoid a funding shortfall and potentially putting Grantham businesses at risk.
Coun Charmaine Morgan, who sits on South Kesteven District Council and the county council, said she had many concerns in the wake of SKDC leader Coun Linda Neal’s decision – made under emergency measures – to join the pool of all the Lincolnshire councils looking to collect more business rates on behalf of the Government.
The decision was made as part of SKDC’s medium term financial strategy, which predicts Government funding of local services would be cut, but says councils would be able to keep a bigger proportion of business rates and use them locally.
Even by making cuts and efficiencies, the strategy document suggests SKDC will have a budget deficit of £214,000 in 2014/15, rising to £1.6m in 2015/16, 1.76m in 2016 and 2.56m in 2017/18.
Coun Morgan’s concern was that with services likely to be cut, the council had not revealed which would be regarded as a priority and said it was a “gamble” to rely on local businesses to make up the shortfall.
She said: “How will they decide on the priorities? Will it be based on the services most used, or most needed? And how do people have a say to influence that?
“It isn’t clear and that’s not democracy in action.”
She said she supported moves to bring in more money to support services, but questioned the reliance on local commerce to provide it, adding: “This is a low income area and many businesses are struggling, so it is wise to rely on an increase in the take from business rates? Is it sustainable?
“This is one of the worst average household income locations in the country, so how can local households increase their support of local businesses?
“Those who receive benefits are really being squeezed financially and that must affect local expenditure. People with higher incomes will travel elsewhere to shop or do business or might go online. That’s not good for Grantham.
“This could end up killing some local businesses.”
The decision was ratified by full council, but Coun Morgan pointed out the report admits there are risks in pooling with other councils because: “any losses will be needed to be shared among the pool”.
A spokesman for the council said the leader had made the decision because the deadline to join the pool was October 31; however the detail had been previously published in the medium term financial strategy and it also was considered by the cabinet.
The spokesman said: “If we collect more business rates than the Government expects us to, we get to keep the vast majority of that excess rather than passing it back to the Government.
“If any one of the seven districts in the pool falls below their business rate baseline, the amount they are short would have to be found from other members of the pool. Some may even have excesses. Therefore, the risk to the authority is quite low because we are sharing it together.
“Pooling will probably help us deliver our ambitious plans for Grantham because the more money we are able to keep can only boost our growth agenda.”