PEOPLE in Wokingham have been hit with a council tax increase.

Wokingham Borough Council has approved plans for a 4.99 per cent hike in 2021/22, meaning people living in Band D properties will see their annual bill rise to £1,620.14.

According to the Conservative-run council, 3 per cent of that increase will generate income that can only be spent on caring for elderly and vulnerable adults in Wokingham.

Additional precepts that raise money for the Thames Valley Police, Royal Berkshire Fire and Rescue and your local parish council will also be added to that bill.

The increase was approved by a majority verdict, after the ruling Tories said they need it because the cost of providing council services continues to rise but funding from central government has dried up.

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Cllr Rachel Burgess (Labour) said the hike is “callous and badly-timed” as many people are struggling financially during the Covid-19 pandemic, when she spoke at the budget meeting on February 18.

She said: “Pay has been frozen, jobs have been lost, incomes are precarious and universal credit is to be cut. Families are worried about how they will make ends meet and the challenges faced by many are huge.

“And yet, in the midst of all this, here is a proposal to slap an extra 5 per cent on residents’ council tax bills.”

She added: “If there were adequate, robust support for councils from central government we simply wouldn’t be in this position, asking residents to pay more in a period of massive economic turmoil.”

£132 million budget for services 

The council set a budget of £132 million for all the services it provides in 2021/22. More than 60 per cent of that money (£82.4 million) will be spent on caring for vulnerable children and adults in Wokingham.

The council is legally required to set a balanced budget for services each year, but unlike most other councils it has not received a government grant for this budget since 2017/18, so the money raised by council tax now funds more than 80 per cent of services.

It is planning to save £6.2 million in 2021/22, by reviewing the management of various services and increasing charges for some services, such as car parking at country parks and garden waste bins.

But council leaders claim none of these changes will have a significant impact on front-line services and it has no plans to make any council staff redundant.

Cllr John Halsall, leader of the council, said: “We are proposing no cuts to services, something I’m aware is being forced on councils across the country who are having to vote on stark service reduction packages.

“We can invest in our services and protect them because of our strong financial management and innovative commercial approach.”

Has Covid-19 had a big impact?

The council has seen demand for costly services increase during the Covid-19 pandemic and lost out on millions of pounds of revenue, after being forced to shut car parks and leisure centres.

The government has provided the council with more than £9.2 million of emergency funding to help it cope with the impact of Covid-19 so far – but that is not enough to cover all the council’s losses.

According to council leaders, the impact of the pandemic has left them with a £200,000 funding gap. This is relatively small, as other councils are facing multi-million pound funding gaps.

The council has been forced to dip into emergency savings, known as reserves over the last year. In March 2021, the council had £12.4 million of reserves. It now has around £9.9 million.

£445 million investment strategy approved 

The council approved a three-year investment programme that aims to make a range of improvements in Wokingham.

That includes £160 million for roads and transport, £156 million for housing and the local economy, and £71 million to help the council radically reduce carbon emissions in Wokingham.

Another £11 million will be spent on improving adult social care facilities and £11.9 million will be invested in children’s services and local schools.

Cllr Halsall said the investment strategy is “ambitious” and “only £11 million of this will fall on council taxpayers”.

Some of the money will come from government grants (£37.4 million) and financial contributions made by developers (£69 million), but most of it will come from borrowing.

The council plans to borrow £292.4 million and then borrow £21 million from its own general fund.

However, the council says it is using the money to invest in a range of projects – such as the regeneration of Wokingham town centre and the construction of affordable homes – and after it has paid off the loans and the interest it will be left with profit which can then be reinvested in council services.

Heated dispute about debt 

Liberal Democrat councillors have repeatedly raised concerns about the amount of debt the council is racking up.

Cllr Maria Gee (Liberal Democrat) said figures in the budget papers show the total amount borrowed by the council will have reached £746 million by 2023/24.

More than 75 per cent of that (£580 million) will be external borrowing, which means it will be borrowed from banks and other organisations and the council will have to pay it all back with interest.

The other £166 million is internal borrowing, which is when the council effectively borrows money from itself by transferring cash from one purse to another. It may still have to be paid back eventually, but there is no interest

Cllr Lindsay Ferris (Liberal Democrat) has accused the Conservatives of failing to disclose the full extent of their borrowing with Wokingham taxpayers and being “deceitful”.

The Conservatives deny this claim and say the Liberal Democrats are “financially illiterate”, as they should really be focused on the net debt, which is the total debt minus the amount of cash the council has and the value of assets it could sell.

According to the budget papers, that will peak at £392 million in 2023/24 and then start falling year after year, as the council begins to profit from its investments and pay the debt off.

The Tories argue that these money-making investments are vital because the government has slashed council funding since 2010.

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Before the budget meeting, chief finance officer Graham Ebers, who is apolitical, said: “It peaks at almost £400 million in 2023/24.

“We will have paid up front for our strategic development locations and won’t have received section 106 of CIL contributions and have one of the highest levels of exposure around the Wokingham town centre regeneration.

“The houses there are selling pretty well, but we know we are not going to sell them all in one year.

“Those two programmes of work force this peak. But it then disappears by 2033. 10 years later that net indebtedness disappears to zero.”