News Release

11th August 2003

EURO PREPARATION COULD PUT UP COUNCIL TAX

Michael Fabricant has expressed deep alarm that local councils, including both Staffordshire County Council and Lichfield District Council, have been hit with a new Whitehall directive which could increase council taxes or force existing services to be cut. And it is the nature of the directive which so infuriates Michael.

The Treasury and Office of the Deputy Prime Minister have issued new guidance to local councils across the country to prepare for the Euro, advising councils that 'significant resources' will be required to prepare now for the currency changeover, including plans for a major PR campaign. The guidance was covertly issued without any government press release. In addition, it advises councils that they may wish to increase car parking charges, fines and charges for other council-run services, using a Euro changeover to mask price 'revisions'.

Michael says "Council taxes are being driven upwards by increased Government red tape which does not result in better delivery of the services we all need. This latest directive is particularly irritating given that there is no general demand to ditch sterling and replace it with the Euro. Indeed, the Government's own assessment has reluctantly conceded that adopting the Euro would jeopardise jobs and damage our economy. So why are Whitehall bureaucrats now secretly advising councils how to issue council tax bills and car parking charges in Euros?" Michael asks.

"I have just returned from Europe and I know that scrapping the Pound would mean higher prices for customers. On the Continent, the Euro has meant soaring inflation for many retail goods. Even this Government guidance admits that a Euro changeover could be used to increase council charges. I believe that time, resources and local taxes could be better spent on providing more police officers and improved hospital facilities in our area".

Michael adds: "I would be interested to know what the people of Staffordshire and the West Midlands think of all this. I hope they will write to their local newspapers and make their views clear".

In the Eurozone, the introduction of the Euro coincided with a large increase in prices for consumers.

In Germany, a poll for finance magazine Focus-Money found that German consumers believed that the cost of living has risen by an average of £66 a month since the Euro was introduced and the Euro has made life 'considerably' more expensive, with price rises across a range of products and services, from food to parking to rail fares (cited in Daily Mail, 5 April 2002).

In Greece, there was a four-day national consumer boycott of shops in protest at price mark-ups. Giorgos Dimitriades from the National Bank of Greece remarked, "across the country, you hear the same story, that the lack of Euro coins is to blame for the mark-ups. But what we are really seeing is a classic case of greed" (cited in The Guardian, 19 September 2002).

In Ireland, an AgriAware survey found that 93 per cent of Irish consumers believed that food prices had increased since the introduction of the Euro (cited in Irish Times, 11 September 2002). An ICM telephone poll carried out in September 2002 revealed that 91 per cent of people believed that their weekly expenditure had gone up since the introduction of the Euro. 88 per cent hade come across situations where the cost of goods and services had been rounded up.

All this is contained in a document published by The Office for the Deputy Prime Minister and HM Treasury entitled 'Local authorities: Euro Preparations Guidance - Part 1' in June 2003 for all local authorities in the UK. The report advises that large amounts of administrative preparations will be required. "Local authorities are strongly advised to commence preparations to ensure they could deliver a changeover" (p.3)... "Sufficient resources would need to be devoted to planning to ensure a smooth and cost-effective changeover"

Resources should be devoted to spin and communications. "Authorities are encouraged to develop communication strategies that dovetail with national plans" (p.25) and on the issue of price hikes, advises to "factor smoothing considerations into communication plans" (p.40). Prices may rise for council services. "Even after rounding according to EC rules, amounts might seem 'odd' or 'rough'... organisations might decide to apply certain further adjustments to produce more convenient Euro amounts, known as 'smoothing'... car parking charges, fines and some charges for retail services (e.g. public conveniences) might need to be smoothed" (p.17). "Coin vended services might require a Euro conversion to be smoothed to an operationally practical level" (p.32). "Where for operational reasons (e.g. for coin acceptance in customer operated ticket machines), it would not be operationally practical for the exact equivalent of the sterling price to be charged in Euro, it would be necessary for the amount to be 'smoothed' in Euro... [operators may wish to] combine the conversion with a suitably publicised general price revision" (p.37)