Local authorities will be allowed to raise council tax by up to 2% in 2015/16, local government minister Kris Hopkins announced today.
Communities secretary Eric Pickles had reportedly been asking for the threshold to be lowered to 1% next year but he appears to have been defeated at the last moment by his Conservative and Lib Dem ministerial colleagues.
Today's financial settlement confirms that councils will face an average cut in spending power of 1.8%, although Mr Hopkins confirmed that no council would face a reduction of more than 6.4%.
In a decision that will disappoint the sector, Mr Hopkins confirmed the Government would press ahead with plans to axe the local government welfare assistance.
He insisted that he ‘did not relish the idea of taking money of councils’ and said there was a ‘need to move away from grant’.
Mr Hopkins said: ‘Like all parts of government, councils need to prioritise spending so it gets to those who need it.
‘The majority of residents remain satisfied with the way their council runs things.’
Mr Hopkins said the Government would continue to provide a council tax freeze grant and local authorities should consider their level of reserves.
He continued: ‘All councils should be freezing their council tax.
‘All councils should taking advantage of this funding.
‘Any council proposing an increase of 2% or more needs to allow local people to approve or veto through a referendum.
‘Local taxpayers would be right in asking whether such substantial reserves are necessary.’
Mr Hopkins said the Government would identify a suggested amount councils should spend on local welfare assistance for each upper tier local authority but that this would not be ring-fenced nor monitored.
Shadow communities secretary Hilary Benn criticised the removal of the local welfare assistance fund, adding: ‘This means councils with the greatest need will face the greatest difficulty as they are already facing the biggest cuts in funding.’
Mr Hopkins said he appreciated that local welfare assistance funding was ‘important to people’ but added: ‘It will be up to local councils to set these priorities and make the money available.’
Labour MP for Coventry South Jim Cunningham said the settlement was an ‘utter disgrace’.
Lewisham East’s Labour MP Heidi Alexander added that local authorities were being forced to make a ‘disproportionate contribution’ to paying off the deficit.
A consultation on the provisional local government finance settlement will run until January 15.
