Local councils across the country are preparing for a potential increase in council tax by an average of 5% annually, as indicated by recent statements from key figures in local government. Louise Gittins, chair of the Local Government Association (LGA), confirmed that while councils have the authority to raise taxes without central government approval, many may opt for lower increases.
The Spending Review provides the funding settlement for education, health, housing and local government. It proposes significant investments for kids services, affordable housing and public transportation funding. Gittins reiterated that these areas of support are indeed welcome relief in the face of still pervasive budgetary constraints.
Council tax increases are not mandatory. Gittins noted, “Many will continue to have to increase council tax bills to try and protect services but still need to make further cutbacks.” This statement highlights the difficult decisions councils face as they strive to maintain essential services while adhering to budget limitations.
The government has given local government a framework in which local authorities can raise their council tax by 5% a year at most. This cap was unfortunately a legacy of the previous administration, and as Chancellor Rachel Reeves has confirmed, it stays there for now. She remarked, “It is a cap, councils don’t have to increase council tax by 5%,” emphasizing that individual councils can assess their financial situations and determine appropriate tax levels.
The Spending Review only expects a real terms 3.1% increase in local authority core spending power. It further presumes that councils will make the most of the freedoms of their council tax multipliers. That projected funding source is the increased police council tax precept. This is all part of a larger, concerted strategy to address financial constraints on municipalities.
Yet the Ministry of Housing, Communities and Local Government has to face a 1.4% real-terms cut in its day-to-day budget already. This already significant cut would place more pressure on already limited local resources. The review introduces a 3% core council tax referendum principle. On top of that, it throws in a 2% adult social care precept. Although these local measures are intended to protect critical services, their passing often results in increased fiscal burdens on already-taxed households.
The Chancellor’s statements highlighted the need for continued investment in policing, stating, “That’s to invest in things like social care, but as is normal to put money into policing.” Detractors like Public Services International say that the continued austerity cuts will harm public services in the end. Tiff Lynch from a local advocacy group stated, “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 go on and it’ll be the public who pays the price.