Local government leaders are warning that council tax rates will have to increase. The Spending Review sets out the funding that is required to deliver high quality, universal public services. Louise Gittins, chair of the Local Government Association (LGA) was first to rub the Spending Review down the right way. She noted that councils are still fighting to keep existing services afloat.
The Spending Review has proposed concrete funding allocations for specific priority areas like reform of children’s services, building more affordable housing and investing in transport. The promise is at odds with the fact that the Ministry of Housing, Communities and Local Government is hit by a 1.4% cut in its day-to-day budget. In reality, councils will have little option other than to increase council tax. The LGA represents councils across the country, and Gittins noted that many might need to increase council tax bills to safeguard services while still implementing further budget cuts.
Currently, councils are allowed to increase their council tax precept by max 5% annually. In order to implement any new plans they no longer need to ask permission from the central government. This cap, brought in by the last administration, has been frozen ever since – something the new Chancellor Rachel Reeves said should change. She reaffirmed that “it is a cap, councils don’t have to increase council tax by 5%,” indicating that some councils may opt for lower increases. Despite this optimism, the Spending Review bunkers down by assuming that councils will implement the maximum increase and leave no room for manoeuvre.
In response to these financial pressures, Gittins stated, “Many will continue to have to increase council tax bills to try and protect services but still need to make further cutbacks.” This sentiment expresses the impossible juggling act that councils need to strike between staying within their budgets and responding to needs in their communities.
Every local authority will see a real terms increase in their core spending power. It’s estimated to increase by an annual average of 3.1% per year from 2023-24 to 2028-29. This figure takes into account projected spending from new spending, including new funding forecasted from the police council tax precept. An increased core council tax referendum principle of 3% plus a 2% ASC precept, as recommended by the review.
Tiff Lynch, the new acting chair of the Police Federation for England and Wales, expressed her dismay at the Spending Review. She pointed out the harmful long-term ramifications it could cause. He 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 continue and it’s the public who will pay the price.”
Local jurisdictions are putting on a brave face, preparing and defending large tax increases. As Gittins acknowledged, new areas of support in the Spending Review offer relief of epic proportions. She’s still worried that the carrot of quality metro services will be hard to keep funded in the future.