Millions of households face council tax rises of up to £58 in biggest increase since 2008

Millions of families face council tax increases of up to £58 on Friday as local authorities across England take advantage of new powers from the Treasury.

Bills are set to rise by an average of 3.6 per cent outside London in what amounts to the largest council tax rise since 2008, according to the Chartered Institute of Public Finance and Accountancy (CIPFA).

It comes after George Osborne allowed councils to charge an extra 2 per cent to fund social care on top of the 1.99 per cent rise already permitted without a local referendum.

Some 127 English councils have picked increases of close to the full 3.99 per cent for the next financial year, according to a survey by CIPFA.

Households outside London with average Band D homes will pay an average of £54 more next year as a result of the changes.

According to Cipfa figures, Gateshead will see the biggest cash increase, with bills rising by £58.69. In Walsall, taxpayers will have to pay an extra £57.39 and Rutland’s bills will go up £57.08.

Families in the North East will see the largest rises according to a regional breakdown, followed by those in the South West, the East Midlands and the North West.

In total 314 of the 420 authorities in England and Wales responded to Cipfa’s survey, with 90 per cent of those who replied planning a tax increase.

Announcing the new rule changes in last year’s Autumn Statement, Mr Osborne said tax rises were needed to help look after the elderly.

“The health service cannot function effectively without good social care,” the Chancellor said.

“The truth we need to confront is this: many local authorities are not going to be able to meet growing social care needs unless they have new sources of funding. That, in the end, comes from the taxpayer.”

However concerns have been raised about whether the tax rises can fill the financial black hole created from cuts to central government funding.

Rob Whiteman, CIPFA Chief Executive, said: “Over the next four years, Government will be making fundamental changes to how councils are funded, essentially withdrawing Whitehall grants by allowing councils to keep more local business rates.

“This is a very positive move for local democracy, but there must be clarity on the detail of the new system to show how relatively less well-resourced authorities will fare.”

The Local Government Association (LGA) has warned that “despite council tax rising, the quality and quantity of services on offer could drop, as the income will not be enough to offset the full impact of further funding reductions next year”.

The introduction of the National Living Wage will also create a “significant further cost pressure” for councils, the LGA warned.

Communities Secretary Greg Clark said: “Our historic four-year funding deal for councils both gives them certainty to plan ahead, and meets the clear request to prioritise care for our elderly population with a £3.5 billion social care funding package.

“It means councils have the freedom to set a social care precept as part of local bills, with excessive council tax increases still subject to local referendum to protect council taxpayers.

“Even with these changes, council tax will still be lower in real terms in 2019/20 than in 2009/10 – and this year’s increase will still be lower than the average 6.2% annual increase between 1997 and 2010.”

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