Local councils in England and Wales can raise council tax by as much as 5% per year. This intentional bump would help generate the revenue needed to support critical services like community policing. Louise Gittins is the Chair of the Local Government Association (LGA). She wanted to make it clear that while councils can raise their rates, they do not have to raise the maximum allowable increase.
The LGA represents local authorities, and Gittins noted that some councils opt for lower increases in council tax as they navigate budget constraints. The government’s recent Spending Review assumes that councils will bundle all this in by assuming every council takes the maximum increase allowed and more. This £2.1bn increase is intended to cover the increasing costs in social care and policing to name a few local services.
The one crumb of comfort that she provided was to confirm that the 5% council tax cap inherited from the last government is unchanged. She stated that while it is a cap, “councils don’t have to increase council tax by 5%.” In defence of the funding, the Chancellor went on to explain how the money is needed to invest in key areas such as social care and policing.
Local authorities only need their local central government’s approval in order to raise council tax beyond 5% — 5% is the current limit for local councils. Yet councils have to make difficult choices about how far to raise council tax, depending on their own local financial context. Gittins expressed concern over this dilemma:
“Many will continue to have to increase council tax bills to try and protect services but still need to make further cutbacks.” – Louise Gittins
The Spending Review commits to a £2.3 billion increase in core spending power for local authorities. It proposes an average real-terms increase of 3.1% per annum. This figure is inflated by a 3% core council tax referendum principle and a 2% adult social care precept. The Ministry of Housing, Communities and Local Government is looking at a 1.4% real-terms cut in its day-to-day budget. This amendment to tackle housing supply will create conditions that are far worse for local councils.
Tiff Lynch, acting chair of the Police Federation for England and Wales, highlighted the negative impact of continued budget cuts on policing:
“This Spending Review should have been a turning point after 15 years of austerity that has left policing and police officers broken. Instead, the cuts will continue and it’s the public who will pay the price.” – Tiff Lynch
This means that the government is only expecting an average increase of 2.3% in “police spending power” in real terms. Much of this increase is dependent on councils increasing the amount of tax they charge. The new Treasury documents allude to spending projected from new revenue. This takes in specific estimated funding raised through the police council tax precept.