Council tax bills could rise up to 5.99% a year as government relaxes cap

Local authorities are to be allowed to raise council tax by up to 5.99% next year, after a further relaxation of the government-imposed cap to address shortfalls in funding for social care.

Families across the UK could see their bills rise by up to £100 a year as a result of the announcement, which will also see councils increasing the charge without holding local referendums.

The move, which has been widely criticised and called “woefully inadequate” by leaders in the social care sector, could see the average band D council tax bill rising to £1,653.30. 

Sajid Javid, the communities secretary, said all councils would be able to raise council tax by up to 2.99% next year to fund local services, which is 1% more than this year. On top of this, 152 councils, which includes all London boroughs, unitary and metropolitan authorities and county councils, will be able to increase it by an additional “precept” 3% to fund social care services.

The minister also announced that 10 councils – Berkshire, Derbyshire, Devon, Gloucestershire, Kent & Medway, Leeds, Lincolnshire, Solent, Suffolk and Surrey – would be involved in a pilot scheme allowing them to retain 100% of business rates raised locally, along with new powers for police and crime commissioners to raise council tax. 

Javid told the House of Commons that raising the cap would give local authorities “the independence they need to help relieve pressure on local services” while “recognising the need to keep spending under control”.

Andrew Gwynne, the shadow minister for Communities, said that the package was “piecemeal”. He criticised Javid for failing to set out a “sustainable plan” for the future of social care.

Margaret Willcox, the president of the Association of Directors of Adult Social Services, described it as “a further blow” for the sector as it awaits longer-term proposals to resolve its funding crisis with a consultative green paper expected next summer.

It would also likely mean that councils with the highest levels of disability were likely to benefit least from the rise, she said, as they tend to be in disadvantaged areas where the tax base is low.

Willcox said: “Allowing councils to increase council tax by 1% next year is woefully inadequate to address the funding gap facing adult social care, raises least funding in the areas of greatest need and is not the best solution to address the impending crisis facing the sector.

“With no fresh funding injection, an increasing number of older and disabled people will not get the care and support they desperately need.

“By the end of this financial year, £6bn will have been cut from councils’ adult social care budgets since 2010 – with need for our services growing all that time.”

The Local Government Association said it would raise just £250m a year towards a funding gap expected to reach £5.8bn by 2020. Its chairman, Lord Porter, warned that councils were approaching “a financial breaking point which will threaten the existence of some local services”.

The conservative peer said: “Years of unprecedented central government funding cuts have left many councils beyond the point where council tax income can be expected to plug the growing funding gaps they face. Local government faces an overall funding gap of £5.8bn by 2020.”

Calling for the abolition of the referendum trigger, Lord Porter said: “While some councils will receive extra funding next year, the government needs to provide new funding for all councils over the next few years so they can protect vital local services from further cutbacks.”

 Others were critical of the cap being lifted. John O’Connell, chief executive of the Taxpayers’ Alliancepressure group said it “beggars belief” that Javid was allowing council tax to rise at a time of below-inflation pay rises.

He said: “With wage growth stagnating and the cost of living on the rise, it beggars belief that politicians are asking for powers to take even more of people’s hard-earned money.

 “Council tax has already nearly doubled in the last decade so it isn’t fair to ask residents to plug the gaps in their finances, especially when we know that council tax already hits the poorest hardest. Councils should instead continue to root out waste and scrap any item of spending that does not help provide an essential service.”

A spokesman for the Department for Communities and Local Government said: “This settlement strikes a balance between giving councils the ability to make decisions to meet pressures and ensure that our most vulnerable in society get the support they need while protecting residents against excessive council tax bill rises.” - The Guardian