Latest Public Sector News

11.03.16

Council tax faces highest rise in eight years, but stays frozen in London

The biggest rises in council tax in eight years will be seen everywhere except London, new figures show.

In a survey of councils, the Chartered Institute of Public Finance and Accountancy (CIPFA) found that council tax in England outside Greater London will rise by an average 3.6%, or £54 for the average band D property, whereas the average London rise will be 0.6%, or £8:04.

In total, it is the largest council tax increase since 2008, reflecting the growing financial pressures on councils, many of whom warned recently that they will have to dip into reserves, increase charges or cut services.

Rob Whiteman, CIPFA chief executive, said: “Councils have made by far the biggest efficiencies in the public sector and with the government incentives over the last Parliament council tax has remained relatively static. But things have changed. Councils are effectively being encouraged by government to raise council tax, which marks a contrast to its stance in previous years.

“Over the next four years, government will be making fundamental changes to how councils are funded, essentially withdrawing Whitehall grants by allowing councils to keep more local business rates. This is a very positive move for local democracy, but there must be clarity on the detail of the new system to show how relatively less well-resourced authorities will fare.”

Council financial leaders warned Parliament’s Communities and Local Government Committee this week that they anticipated as many problems as benefits from the 100% business rates devolution.

The number of councils accepting funding from the government to freeze tax was 228 last year, a drop from 235 the year before.

Overall, Inner London has the lowest increase of 0.5% or £4:96 for band D properties, whereas the north east has the highest at 3.8% or £59:62.

The maximum amount allowed to councils is a 1.99% general increase and a 2% increase for adult social care.

New research this week warned that the government’s benefits reforms will also cause much greater financial loss to poorer areas in the north than richer areas in the south.

The Local Government Association is also calling on the government to help relieve financial pressures on councils by bringing forward £700m social care funding to the next budget, due on Wednesday.

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