CORNWALL Council has been warned that relying on the double council tax premium on second homes, which comes into effect next year, won’t save the council which is on a financial precipice. A councillor has warned that second home owners may use loopholes to get around paying it.
A meeting of the unitary authority’s budget scrutiny committee was held on Thursday, October 31 to discuss ways to make millions more savings despite council officers already making “not necessarily desirable” cuts and savings of £49m to various service directorates in the past few months.
The net revenue budget for 2025/26 is forecast to be £825m. After “income” for the council is taken into consideration, including council tax (around £417m), the second homes premium (£23.7m), business rates (£273.7m) and government grants (£101m), it still leaves a budget gap of just over £9m.
The council is assuming a maximum 4.99 per cent council tax rise for the third year running, which includes two per cent for adult social care, as well as up to £24.8m from the 100 per cent council tax premium on Cornwall’s 12,760 second homes. However, the meeting heard that 550 of those homes may be excluded due to residency plans, which would reduce the amount coming to the council to £23.7m.
Chief operating officer Tracie Langley suggested that £5m of the second homes council tax should be transferred to the council’s reserves to cover any shortfalls.
Perranporth councillor Steve Arthur – who’s the deputy leader of the council’s politically non-aligned group after stepping down from the Tory group last year – said: “I worry we’ve got too much play on this double council tax (on second homes). I think the first year people will pay it and get caught out by it, but I think it will fall off a cliff because a lot of the second home owners have got older children who don’t own houses and they’ll be putting them in their names. I think it will fall off a cliff the second year.”
Ms Langley replied: “I don’t disagree actually, but I have to make assumptions based on the information I have.”
“When it comes to the budget, if you think second home owners are going to save the council, please don’t put too much faith in it,” warned Cllr Arthur.
The council’s deputy leader and portfolio holder for resources David Harris said of transferring second homes to children: “It’s not that easy and these children will still have to show that the property that’s now been given to them isn’t a second home. So if the family live in deepest, greenest Surrey, the sheer fact that mummy and daddy give the house to Jemima and Jeremy isn’t going to be much help.”
Cllr Arthur responded: “But if that’s Jemima and Jeremy’s only home, it’s not a second home.”
Cllr Harris added: “I don’t think it’s as easy to avoid as you suggest. I’m quite comfortable that having spoken to our teams here that that sort of stuff would get picked up. I heed the warning, that’s why Tracie’s sensible in moving £5m into a reserve.”
Cllr Stephen Rushworth pointed out that there are “loads of loopholes” and any second home owner could make their children rent it off them.
Any suggestions on further savings made by the budget scrutiny committee to bridge the £9m gap will go to the council’s Conservative Cabinet next month and the proposed budget for 2025/26 will be discussed by full council in February.