Council tax rises: 95% of local authorities planning hikes amid Government cuts and rising demand for services

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Nearly all councils plan to increase council tax this year as a vast majority of local authorities fear for their financial stability, a survey suggests.

Council tax is planned to increase in 95 per cent of councils, while 93 per cent will hike charges in order to make ends meet, according to the 2018 State of Local Government Finance research.

The planned increases come against a backdrop in which 80 per cent of councils fear for their financial stability.

Council tax can be hiked by up to 3 per cent this year, in line with inflation, before a referendum is triggered, while authorities can also levy an additional “precept” to raise money for spending on social care.

The greatest immediate pressure on budgets came in children’s services (nearly 32 per cent of councils), followed by adult social care (nearly 28 per cent), and housing and homelessness (19 per cent).

Adult social care was the greatest long-term pressure (nearly 38 per cent), the survey, conducted by the LGiU think tank and The Municipal Journal found, said.

A total of 113 individual councils responded to the survey, representing a third of all English local authorities.

Jonathan Carr-West, chief executive of LGiU, said the figures offered few surprises.

He said: “Councils are on the edge. They are for the most part holding services together (though a significant minority are not). But they can only do this this by raising council tax, increasing charging and draining their reserves.

“The system is unsustainable and needs far more fundamental reform than is presently on offer. It’s simply not acceptable that we don’t know how local government will work post 2020.

“Councils are calling for assurances around funding for the next three years and for a fundamental redesign of the finance system. At present government is offering neither. That has to change.”

In response, Local Government Association chairman Lord Porter said: “Some councils continue to be pushed perilously close to the financial edge.

“Many will have to make tough decisions about which services have to be scaled back or stopped altogether to plug funding gaps.

“Extra council tax raising powers will helpfully give some councils the option to raise some extra income but will not bring in enough to completely ease the financial pressure they face.

“This means many councils face having to ask residents to pay more council tax while offering fewer services as a result.

“The LGA has warned about the urgent need to address the £2 billion funding gap facing children’s services.

“A child is being referred to council children’s services every 49 seconds on a daily basis and councils started more than 500 child protection investigations every day last year – up from 200 a decade ago.

“This unprecedented surge in demand shows no sign of abating.”

A spokesman for the Ministry of Housing, Communities and Local Government said: “Our finance settlement strikes a balance between relieving growing pressure on local government whilst ensuring that hard-pressed taxpayers do not face excessive bills.

“We have listened to representations made from councils and delivered on these with extra funding.

“Overall councils will see a real-term increase in resources over the next two years, more freedom and fairness and with a greater certainty to plan and secure value for money.

“We are also delivering on our commitment to give councils more control over the business rates they raise locally – with millions of pounds staying in communities and being spent on local priorities.

“We want to work with local government to develop a new funding system for the future and encourage councils to submit responses to the review currently under way.

Additional reporting by PA