Taxpayers across Warwickshire would avoid severe council tax hikes if the running of the county is reorganised into two unitary authorities instead of just one, two current district leaders have stated.
Leader of Warwick District Council Cllr Andrew Day, and leader of Stratford District Council Cllr Tony Jefferson have warned a report from Deloitte showed residents in south Warwickshire could be hit with a big increase in council tax if a single unitary authority to run the whole of the county was created.
The report recommends creating two unitary authorities instead, one for the north of the county running North Warwickshire, Nuneaton & Bedworth, and Rugby, and one for the south running Stratford and Warwick.
Cllrs Day and Jefferson say this would result in better value for money for taxpayers across the county.
Cllr Day said: "The report makes it clear that having a single unitary authority controlling the whole of the county would mean residents in the south would have to pay far more than they do now in council tax.
"If two unitary authorities were created instead, residents in both Warwick and Stratford Districts would avoid a steep rise in council tax, and would still benefit from the savings made by getting rid of the old system.
"Residents in the north of the county would not miss out either - having two authorities or one would make little difference to their council tax payments.
"This means the fairest option for taxpayers across the whole of the county is to have two unitary authorities instead of one."
While creating a single unitary authority would result in additional savings to the new council's running costs, the council tax system must be overhauled in a process called 'council tax harmonisation', which can create problems.
Currently, households in different districts and boroughs pay different amounts even though their houses are in the same tax band.
For example, the lowest Band D value in south Warwickshire pays £144 to their district or borough council, whereas the highest Band D value in the north of the county pays £239.
If one authority were to control the whole of the county, it is likely the authority would choose to base its council tax system around that £239 figure to avoid missing out on income.
As south Warwickshire's council tax is currently much lower than the north's, there would be a big rise in council tax for those living in the south when the tax is 'harmonised' across the county - and the process could take a decade.
Splitting the county into two unitary authorities would mean this effect is drastically minimised, as Band D households in Stratford and Warwick Districts pay similar amounts in their precepts compared to in the north.
A new single authority could instead choose to 'harmonise' council tax around the low £144 figure - which would result in a tax cut for the north.
But the report makes it clear this option would result in an enormous loss of income - so much so that it would make creating a new authority pointless.
And harmonising council tax at a figure in the middle would still result in South Warwickshire having to pay more.
Cllr Tony Jefferson added: "While creating a single authority could result in marginally more savings for a new council overall, it can create more problems than it solves because of this process of harmonising council tax.
"Savings will be crucially dependent on leadership and management having the capability to deliver. Promises are easy to make.
"A two unitary solution will mean council tax is much fairer for all taxpayers.
"While we strongly believe this is the best option for the county, we will await the results of the consultation with residents, local businesses and other partner organisations on what they think of the potential options now it is clearer what the Council Tax and wider financial implications may be, before reaching a conclusion."
