Economy and Infrastructure

26.02.18

LGA: Councils under ‘severe funding pressures’ – and tax rises will not save services

Councils have warned that they will have to reduce services in the coming year despite an increase in the level they can charge for council tax and the use of the social care precept.

Nearly every authority in the country with social care responsibilities has plans to implement the 3% precept, which is expected to generate more than £500m in additional funding, but the LGA says the money is just not enough to deal with “severe funding pressures.”

A majority of those councils will also look to increase general council tax by 2.95%, the upper limit of what can now be charged without a referendum, and, while this is also going to raise nearly £600m across the country, central government cuts and an increase in costs due to the living wage will mean councils still see a reduction in funding.

LGA chairman Lord Porter, who sits no PSE’s Editorial Board, said many councils are being left with no choice but to ask residents for greater contributions or risk losing 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,” he commented.

“Extra social care funding will be wiped out by the significant cost pressures of paying for the government’s National Living Wage and extra general council tax income will only replace a third of the central government funding they will lose this year.”

LGA figures show that more than 40% of councils are considering both raising council tax and implementing the social care precept, meaning residents would see a rise of 5.9% to their bills.

Porter, who appeared in the last issue of PSE, also used the opportunity to call for the government to speed up plans to allow authorities to retain 100% of business rates.

Communities and housing secretary Sajid Javid announced in December that he would be dropping targets to implement 100% retention by 2020 and instead look to bring in 75% retention with the rest still going to central government.

It is not the first time the LGA has asked the government to deal with business rates as an answer to funding pressures, but Porter argued the situation had now become urgent.

“To maximise the potential of local government and protect local services from further cuts, funding gaps must be properly addressed and local government as a whole must be allowed to keep all of the business rates it collects locally each year to put it on a sustainable footing,” he added.

Top image: Joe Giddens

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