LGA warns that extra council tax income in 2018/19 will not protect local services

By agency reporter
February 27, 2018

All councils will be able to increase general council tax by up to 2.99 per cent in 2018/19 to fund local services without the need for a referendum – an increase of one per cent on the previous year. Most district councils can increase by £5 per year at Band D level. 

England's 152 social care authorities – responsible for caring for the elderly and disabled – can increase council tax by up to a further three per cent in 2018/19 (up to 5.99 per cent in total). Income from this extra precept must be spent on adult social care.

With town halls across the country setting their final budgets and council tax levels over the next few weeks, extensive research by the LGA reveals: 

  • 147 out of England’s 152 social care authorities are considering or have approved an adult social care precept in 2018/19. This will raise an extra £548 million in total to pay for social care services this year. The LGA is warning this will be wiped out by the cost of paying for the Government’s National Living Wage. Councils also face the risk of having to pay at least £400 million in back-pay liabilities for sleep-in carers. 
  • Of these councils, 108  (71 per cent) will be increasing general council tax by 2.95 per cent or above. In total, general council tax increases will raise a further £584 million for local services in 2018/19. This compares to core central government funding to councils being cut by £1.4 billion (28 per cent) this year alone.
  • 64 councils (42 per cent) are considering or have approved increasing council tax by 5.99 per cent (2.99 per cent general increase plus three per cent social care precept) in 2018/19.
  • 75 social care councils (49 per cent) will be unable to levy any social care precept in 2019/20 when services caring for the elderly and disabled will face an annual funding gap of £2.3 billion. Councils have been able to front-load social care precept increases by up to three per cent in both 2017/18 and 2018/19. However, the total social care precept allowed in the three years to 2019/20 cannot exceed six per cent.
  • Five social care councils have approved or intend to freeze council tax completely this year.
  • For 88 shire districts with the lowest council tax levels the new 2.99 general limit does not provide any more spending power, as they can already increase council tax by three per cent or more as a £5 increase is greater than a three per cent increase. If all district councils use their full council tax flexibilities in 2018/19 they would raise an additional £66 million to fund local services.

With local government facing an overall funding gap that will exceed £5 billion by 2020, the LGA is warning these council tax rises will not prevent the need for continued cutbacks to all local services this year. Councils will also have to continue to divert ever-dwindling resources from other local services, including filling potholes, maintaining our parks and green spaces and running children’s centres, leisure centres and libraries, to try and plug growing funding gaps in adult social care, children’s services and homelessness support.

The LGA said the Government needs to urgently address the growing funding gaps facing local services and provide the financial sustainability and certainty needed to protect the local services our communities rely on by committing to allow local government as a whole to keep every penny of business rates collected.

LGA Chairman Lord Porter said “Since 2010, council tax bills have risen by less than inflation and other key household bills. 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. 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. This means councils will have to continue to cutback services or stop some altogether to plug funding gaps.

“We have repeatedly warned of the serious consequences of funding pressures facing services caring for the elderly and disabled, protecting children and tackling homelessness for the people that rely on them and the financial sustainability of other services councils provide. It is unfair to shift the burden of tackling a national crisis onto councils and their residents.

“The need for adequate funding for local government is 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.”

* Local Government Association https://www.local.gov.uk/

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