Moves to increase the district council's share of the Council Tax by nearly 11 per cent came a step closer to completion this week.

Members of South Lakeland District Council's ruling cabinet backed a recommendation for a 10.8 per cent hike in Council Tax bills - up £13.28 for 2003/4 for a Band D property. The full council will now have its say on the final tax demand in the annual budget showdown on February 25.

Starting with the good news, SLDC finance director Jack Jones said that there was a surplus of £1,031,300 in its capital funds. This money can be spent on long-term investments like buying property or equipment but cannot cover the council's running costs. Suggestions for spending this cash will be put to cabinet at a future date.

The capital boon is as a result of the authority paying off its loans to achieve debt-free status partly an outcome of the painful Fundamental Review of Services in 2001/2, which saw SLDC cut services such as public toilets to save £1.2 million.

The Government's reward for being debt free is that the authority now gets to keep all the proceeds from selling council assets which are mainly council houses bought under the right-to-buy scheme. That shift will earn the council £3.8m. On top of that, restrictions on how it uses sales proceeds are being lifted, freeing up another £3 million.

The bulging capital pot will pay for schemes which the authority is already committed to over the next five years - such as spending £1.6million on lorries and boxes for kerbside recycling and leave a £1 million surplus.

It will also allow the authority to add another £3 million to its £12 million portfolio of stock market investments.

"You can use that investment income to keep Council Tax down in the future," Mr Jones told councillors.

However, he warned that there was just a "a small window of opportunity" to reap the right-to-buy rewards since the Government was planning to pool the proceeds nationally from as early as 2004/5 and redistribute it on the basis of housing need meaning that most of the money would head towards the South East.

Yet despite SLDC's stronger financial footing, the authority still needs Council Tax payers to support service costs following a government grant described as "relatively poor" by Mr Jones.

Costs that are also pushing this year's substantial tax hike include covering a temporary expense of £600,000 for shifting staff pay grades and saving up for kerbside recycling.

Half of the £420,000 needed to run the recycling service district-wide by 2006 is included in the budget a move Mr Jones urged councillors to back or be forced into setting "unpalatable" tax rises in the next few years.

In addition, Mr Jones said a "cushion" had been built in to the budget to protect the authority against financial risks including escalating pension costs and shrinking investment income due to stock market falls.

Backing his finance director's budget, SLDC chief executive Philip Cunliffe said: "We are in a good, prudent, financial position to see our way forward.

"We have done a lot of work over the past three or four years which has come to fruition in revenue capital, we are now in a position to put things back into increased services, into partnership funds and capital spending. We are beginning to put our money where our mouth is and see that this authority is well managed and well run."

February 14, 2003 10:00