William Eichler 26 February 2018

Council tax increases not enough to stop cuts to services, warn town hall chiefs

Services will continue to be cut back despite proposed council tax increases, council chiefs warn.

As local authorities set their final budgets and council tax levels, the Local Government Association (LGA) has warned the projected tax rises will not address the £5bn funding gap the sector will face in 2020.

Local authorities will have to continue cutting all local services this year, they said.

A total of £548m will be raised through the adult social care precept in 2018/19. However, the LGA found this will be ‘wiped out’ by the cost of paying the National Living Wage.

The LGA also calculated general council tax increases - proposed by 71% of councils - will raise £584m for local services in 2018/19. Again, however, these gains will be undermined by the £1.4bn cut in core central government funding this year.

All councils can increase general council tax by up to 2.99% in 2018/19 to fund local services without the need for a referendum. Most district councils can increase by £5 per year at Band D level.

England's 152 social care authorities can increase council tax by up to a further 3% in 2018/19 (up to 5.99% in total). Income from this extra precept must be spent on adult social care.

Other findings include: 42% of councils are considering or have approved increasing council tax by 5.99%, and five social care councils have approved or intend to freeze council tax completely this year.

‘Since 2010, council tax bills have risen by less than inflation and other key household bills,’ said LGA chairman Lord Porter.

‘But faced with severe funding pressures, many councils feel they are being left with little choice but to ask residents to pay more to help them try and protect their local services.

‘The extra income this year will help offset some of the financial pressures they face but the reality is that many councils are now beyond the point where council tax income can be expected to plug the growing funding gaps they face.’

‘This means councils will have to continue to cutback services or stop some altogether to plug funding gaps,’ he added.

A survey last month revealed one in 10 council bosses fear their local authority will not have enough funding to fulfil their statutory duties in 2018/19.

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