Latest Public Sector News

25.01.18

County council tax hike powers will only meet 10% of costs

Plans to allow councils to increase tax by a further 1% are only likely to cover a tenth of the money lost to counties through central government budget cuts.

The claim comes from the County Councils Network (CCN), which says the measures are likely to raise around £105m in stark comparison to £1bn lost through funding cuts.

Communities and housing secretary Sajid Javid announced that local authorities would be given the power to increase tax by 3% without a referendum in December last year, 1% higher than the previous limit.

But county councils have opposed the changes, arguing that they are subjected to the “toughest financial challenge” of all authorities in the country.

Due to the changing nature and complexity of services and the generally lower number of residents under the jurisdiction of county councils, raising tax is unlikely to make as big a difference as it will in other more populated areas.

Leaders at the CCN have warned that the resulting shortfall could lead to “unpalatable” decisions being made on services, specifically referring to potential new charges for social care services.

Cllr Paul Carter, chairman of the organisation, said that counties were set to face a £2.5bn funding gap by 2020-21.

“The ending of essential grants this year for frontline and life-critical services means we are facing some truly unpalatable budget decisions, which will see rural bus subsidises all but end, new charges for care services, children’s centres and libraries disappear and potholes go unfilled,” Carter said.

“Even if counties raise council tax under these new freedoms, it won’t prevent many of these service reductions taking place. Residents in rural counties will be asking why they are paying so much more in council tax than anyone else but receiving so much less.

“Two years ago, we faced a similar situation, and the government listened to our concerns and introduced transitional grants. I hope ministers in Whitehall see sense and provide Sajid Javid with the resources he needs to extend this help and prevent unfair cuts and council tax rises in our county heartlands.”

County council leaders will now be actively lobbying their local MPs in the lead-up to parliamentary vote on the final local government settlement, arguing for an extension of ‘transitional funding.’

This £300m two-year funding package for all councils was introduced in February 2016 by then communities secretary Greg Clark in an attempt to tide over problems surrounding resources.

CCN argues that extending this funding for the next two years could prevent the widespread closure of frontline services and non-statutory services, as well as help limit the level of council tax rises in counties.

CNN’s director, Simon Edwards, will be writing about the finance settlement for the upcoming edition of PSE (Feb/March).

Top image: Joe Giddens

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