Now families are poised for £100 rise in council tax
HOUSEHOLDS face an average £100 hike in council tax next year under government plans to allow town halls to help fund social care.
Jeremy Hunt is poised to lift the decade-long cap on increases, amid warnings that hundreds of local authorities could go bust.
Rises of more than 2 per cent are currently banned unless they win approval in a local referendum. In recent years town halls have been allowed to raise an additional 1 per cent to pay for social care, making a total of 3 per cent.
But a government source said ministers were looking to relax the rules next year
‘Not returning to rises we saw under Labour’
and let councils hike taxes by a total of up to 5 per cent. The source said that giving town halls more ‘flexibility’ to raise money would ease the pressure to increase central funding.
‘Councils are facing pressure on social care, and the social care levy, which would have raised money to help, has gone,’ the source said. ‘So there is a case for allowing councils more flexibility where they can make the case for it locally.
‘But we would still be talking about increases below inflation – no- one is talking about returning to the sort of rises we saw under Labour.’ A 5 per cent rise on an average Band D bill of £1,966 would cost an extra
£98 next year.
The move is likely to be announced by Mr Hunt in Thursday’s Budget. But Whitehall sources said wrangling was continuing within Government over exactly how much flexibility to allow.
Some ministers are resisting the move, arguing that it would pile pressure on families already facing the worst cost of living crisis in decades.
But councils are pushing for the freedom to set their own bills without constraint, arguing that their ability to provide core services is being eroded by inflation.
The Local Government Association has warned that councils face a £ 3.4billion funding gap next year ‘just to maintain services at preCovid levels’. It told the Treasury that to fill the gap using council tax alone, bills ‘would have to increase by well over 10 per cent next year’. A survey by the County Councils Network last week warned that almost fourfifths of authorities fear they could go bust next year without further funding.
Council tax referendums were introduced by the coalition government in 2012 following years of inflation-busting rises under the previous Labour administration.
Sources said the referendum requirement would be kept in place, but only for increases of 5 per cent or above. It comes as a survey due out today by care association Adass reveals that 94 per cent of social care directors believe their service does not have enough staff or resources to get through the winter.
Adass chief executive Cathie Williams said the sector ‘desperately’ needs emergency funding, noting that £500million pledged in September to support hospital discharges has not yet been allocated.