Local councils across the UK face the prospect of raising council tax by up to 5% a year as they navigate funding challenges. Louise Gittins, chair of the Local Government Association, pointed to something European media often miss. While councils have the power to increase taxes at will, without central government oversight, many may opt to limit increases in order to avoid adding pressure to their constituents’ wallets.
In an interesting and lively discussion of the Spending Review on Wednesday, Gittins pointed out some of the wins. He shared his optimism over progress on children’s services, affordable housing and transportation investments. As we discussed, it’s far from rosy with council’s continued difficulties in delivering basic services and keeping the budget balanced.
The Local Government Association is the national representative body for England’s councils, always fighting their members’ financial corners. Writing in The Guardian, Gittins said that most will be forced to increase council tax rates to defend basic services. Even with these moves, they will need to make further cutbacks. These remarks speak to the continued squeeze that LAs are under as they try to pad service with little money.
Local Government Chancellor Rachel Reeves – herself a former local government minister – confirmed that the ordinance council tax cap will remain at 5%. This policy was inherited from the former administration. She stressed that councils could “decide to go for a maximum increase in council tax.” They are not mandated to do so. As Reeves pointed out in a recent interview, “it’s a cap, councils don’t have to put up council tax 5%.”
Further down the line, the government’s math is based on an average increase in “police spending power” of 2.3% a year in real terms. This includes projected spending based on new income streams, like forecasting funding from the police council tax precept. Reeves went on to highlight the significance of these funds. In his resignation letter, he wrote, “We should be investing in social care, and it’s equally normal to fund social policing.”
Even with these assurances, worries persist about big cuts to the budget overall. Tiff Lynch, the acting chair of the Police Federation for England and Wales expressed her anger. She’s mad that there’s not more sustained pressure on the budget for policing. He stated, “This Spending Review should be a watershed after 15 years of austerity which has already left our policing and police officers shattered. Instead, the cuts will continue to flow, and the public will be the ones to pay for it in the end.”
The Ministry of Housing, Communities and Local Government is facing a 1.4% real-terms cut to its day-to-day budget. This reduction may well make the impossible task of local councils even harder. The Spending Review’s assumptions clearly indicate that councils will be raising council tax. They are required to do this in order to fill in their budget gaps.