Living wage will swallow up 5% rise in council tax

INFLATION-BUSTING council tax rises to pay for social care will be eaten up by the cost of George Osborne’s national living wage, town halls warn today.

The former chancellor’s policy will place a huge burden on firms and councils that employ care workers, who are often paid very little.

The minimum wage is £7.20 per hour, but it is due to rise to £7.50 an hour in April and to reach £9 an hour by 2020.

Local authorities are being allowed to levy an additional 3 per cent on council tax bills this year – over and above the standard 2 per cent increase – to help fund social care. Most have indicated they plan to do so, which will means millions of families face a 5 per cent increase in bills. This will add £76 to the cost of the tax for an average Band D property.

But the Local Government Association says this is unlikely even to cover the cost of paying the national living wage to home helps and care home staff.

It means millions will have to be found from elsewhere to pay for social care.

The 3 per cent social care precept is forecast to raise £543million to pay for social care, with 147 of 151 councils expected to levy an increase of some kind. But the LGA warns that this extra income will be swallowed up by the cost to councils of paying for the national living wage, which will total more than £600million next year.

With councils facing an overall funding gap of £5. billion by 2020, the LGA says council tax rises will not prevent further cuts to services, including social care.