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Three in Four Councils to Increase Council Tax by the Maximum to “Protect Vital Services”

Three quarters of councils are set to increase their council tax by the maximum amount this April, as local authorities say they are setting their budgets in the most ‘difficult circumstances in decades.’

Research from the County Councils Network (CCN) has found that 84 councils out of 114 who have published their 2023/34 budget proposals so far plan to raise council tax by the maximum permitted which is 4.99%. These are upper-tier councils with social care responsibilities.

With inflation running at 10.5%, local authorities face multi-million funding gaps which have built up and which they need to close to balance their budgets for 2023/24. Council leaders say they recognise the cost of living pressures for residents, but have reluctantly put forward maximum rises because they have ‘little choice’ in order to set a balanced budget and to fund local services which will be vital for struggling households.

The changes will come in for residents in April at the start of the new financial year. Councils are able to levy a maximum of 4.99% should they chose to do so – a total of 2.99% for general council tax and a further 1.99% for the adult social care precept, which is ringfenced for care services. Government funding levels for 2023/24, particularly for care services, are predicated on councils taking the maximum council tax rise.

In total, 114 councils out of 152 have published their budget proposals for 2023/24. CCN data shows that:

  • All councils bar one plan on raising council tax next year. In total, 113 councils have put forward council tax rises. A total of 84 of these authorities have put forward maximum rises – 4.99%.The remaining 38 councils have yet to declare their intentions. Three councils – Croydon, Thurrock and Slough – have special dispensation to propose rises over 4.99%.
  • A total of 30 councils have put forward council tax rises but have declined to levy the maximum. These rates vary across the country with the lowest rise put forward at 2%.
  • The average Band D household will see their bills rise by £99 a year with a 4.99% increase, though this will vary across the country. Split across a year this equates to £1.91 a week, with councils arguing that such a rise is necessary to protect vital local initiatives and allow them to invest in improving public services.
  • The typical Band D council tax bill for residents in rural county areas is over £2,000 a year and will rise to £2,149 on average with a 4.99% rise. This is 20% higher than average bills faced by residents in London from April, with Band D households facing an average of £1,780 per year. This is because county areas have historically received lower government funding than London for services and councils have to make up the shortfall through higher taxation.

Despite the government providing extra funding for councils in October’s Autumn Statement, which was welcomed by CCN, significant funding pressures, fuelled by inflation, still remain. Inflation is projected to add £1.5bn to the budgets of 40 county and rural councils in 2023/24.

Those county local authorities face some of the largest funding deficits in the country as a result of inflation and demand pressures.

Even accounting for a 4.99% council tax rise, Hampshire County Council (which gets 89% of its revenue from local tax) faces a £57.7m funding deficit in 2023/24 which the authority says will have to be filled by reserves.

Durham Council faces a £10.2m deficit even after proposing £12.4m in savings and a 4.99% council tax rise. Cheshire East Council faces a deficit of £25.4m which will be filled through savings and council tax rises.

Cllr Sam Corcoran, Labour Vice-Chairman of the County Councils Network and Leader of Cheshire East Council, said:

“With inflation reaching levels not seen for over 40 years and with demand-led pressures for care services showing no sign of abating, local authority leaders are setting their budgets in the most difficult circumstances in decades.

“We all recognise the cost-of-living crisis is impacting on every household in the country and disproportionally on low incomes, but we have little choice but to propose council tax rises again next year, with many local authorities reluctantly opting for maximum rises.

“With councils facing multi-million funding deficits next year, the alternative to council tax rises would be drastic cuts to frontline services at a time when people at the sharp end of the cost-of-living crisis need us to be there for them. With the financial situation for councils looking extremely tough for the next few years, we will be calling on the Chancellor for further help in the March Budget.”

 

 
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