25 January 2008
Council tax is set to rise by an average of 4%, a snapshot survey of more than 100 draft budgets by the Local Government Association has revealed.
The LGA said the 4% rise — roughly in line with the latest retail price index figures — would take average council tax bills to £1,145 for 2008/09.
In December, local government minister John Healey warned local authorities to keep tax rises below 5%, but the LGA said councils were having to make 'massive efforts' to comply, with particular difficulties in authorities that provide social care.
It warned that funding problems were likely to worsen, with lower increases in government grants expected from 2009 to 2011.
LGA chair Sir Simon Milton said: 'Keeping council tax down has been made harder by several government departments shifting extra costs on to councils whilst limiting funding from central government to a real-terms 1% increase.
'Council tax would have been a lot lower with a more realistic central government grant. The toughest financial settlement in a decade has left councils with difficult decisions to make.'
Milton reiterated the LGA's call for a 'root-and-branch reform' of funding to make councils less dependent on money from central government.
Responding to the LGA survey, Healey countered: 'There is no excuse for excessive council tax increases. This is a fair and affordable settlement for councils, with over £900m extra core funding next year, in a tight financial climate.' Councils could also save £1.5bn next year to boost services or reduce council tax 'just by cutting waste at the same level as central government', he argued.
In a report published on January 24 to coincide with the LGA survey, the New Local Government Network called for an additional 10% income tax band for those earning more than £200,000 a year, to be used to fund a general reduction in council tax.
The think-tank also argued for a local property levy to replace council tax, and councils to be able to vary 'banding' rules.
PFjan2008
