English councils prepare to raise council tax

15 Jan 18

Councils across England are proposing to take advantage of the ability to raise council tax by a further 1%, Public Finance has found. 

A number of unitary, counties, metropolitan borough and district councils have drafted new plans on implementing the maximum increase in response to ongoing pressures on services and the 2% rise in public sector pay. 

The draft local government finance settlement, released last month, raised the amount councils could increase council tax by [1%] over the next financial year before they have to hold a referendum.

For districts, the settlement means they can now increase council tax by 3%, or £5 on council tax band D, whichever is greater.

For upper-tier authorities, the maximum allowable increase has risen from 5% to 6%. This includes a 3% precept to fund adult social care services.

Norfolk County Council had planned for a 5% rise, but is now pushing for the extra 1%.

Council leader Cliff Jordan said:  “My chief finance officer is advising us to accept this offer, which would add £4m to our budget, every year – easing pressure on our services.

He added: “We’ve got rising costs and rising demand for services and have had to budget for a 2% pay rise for staff.”

Shropshire Council estimated its proposed 6% increase would lead to £8.2m extra income.

Its public consultation said: “If we didn't generate this additional council tax income, further savings to key council services would need to be identified to fund this shortfall.”

East Riding of Yorkshire Council said a 6% rise would be put to a full council meeting on 8 February.

It said it needed to cut of £40.3m from its annual budget because of government funding reductions.

St Helens Council has approved a 6% rise, subject to consultation. The authority has said it faces a £90m budget gap by 2020.

Anthony Johnson, cabinet member for corporate services, said: “It pains me to present this budget, but the overall grant reductions we have faced since 2010 have placed enormous pressure on the services provided by the council.

“We are left with no choice but to increase council tax by the maximum amount.”

Many councils have stuck to their initial budget plan, over concerns on the impact on residents, however.

Telford and Wrekin Council will go ahead with its 3.2% rise agreed last year, despite the funding settlement.

Lee Carter, cabinet member for finance, said: “We could have increased council tax by up 6%, but this would only add to the financial pressures that so many in the borough already feel.

“And we are making it clear along with councils from all political colours across the country that the government cannot expect to resolve this by asking the public to pay the bill for providing good services for the elderly and young through their council tax.”

Among the districts, Thanet District Council is planning for a maximum 3% rise, despite it benefitting by more than £5m a year through Kent’s participation in the business rates retention pilot.

Stratford-upon-Avon District Council has proposed to dip into its £9m reserves to keep rises to 1%.

It said the increase would go to tackle homelessness and provide affordable housing.

Council leader Chris Saint: "Whilst the district council is facing inflationary pressures of over 2% increase for pay and contracts, the cabinet recognises that family budgets are under significant financial pressures, which is why we are proposing to fund the revenue gap using our reserves to minimise an increase for next year.”

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