EXCLUSIVE: One in three shun ‘impossible’ maximum council tax rise
According to LGC research, far fewer municipalities than predicted plan to increase council tax by the new legal ceiling next year, as metropolitan areas warned they face an “impossible choice” between cutting services and raising taxes for those already under Residents under pressure stand.
The LGC Council Tax Tracker has so far received council tax proposals for 2023-24 from 48 councils. Of these, more than a third (37%) are not currently planning to implement their agency’s maximum allowable increase.
The number casts serious doubts on what the Treasury said at the time of the Chancellor’s autumn statement that 95% of councils were expected to make full use of the new limit.
A government spokesman told LGC that council tax rates are at the discretion of local authorities.
In his November 17 statement, Jeremy Hunt announced a new maximum council tax increase of 4.99% without a referendum. For 2023-24, municipalities can increase the municipality’s property tax by 2.99%, with a further 2% increase in the social welfare bid for top-level authorities being allowed.
Districts can increase their rate of council tax by 2.99% or £5 on a Band D bill if this is higher.
LGC’s research found that Mets were the least likely to plan the full 5% hike, as only three of the 10 sampled companies are currently willing to do so. They are City of Bradford MDC, Dudley MBC and Leeds City Council.
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In its current budget consultation, Walsall MBC proposes a 2.99% core council tax increase without increasing the welfare bid.
Walsall leader Mike Bird (Con) recently told the Express and Star: “We’re not raising it by 5 per cent because we don’t think that’s the right thing to do… Passing on another 2 per cent increase would have the Government doing its dirty work for them .”
Sunderland and Newcastle City Councils and North Tyneside MBC are each proposing an overall increase of 2.99% – including a 1% increase in the bid.
In an open letter to Mr Hunt, reported by Chronicle Live, Newcastle leader Nick Kemp (Lab) said: “I do not accept that this option continues to tax our residents, many of whom cannot afford it , will increase the money needed to fund the increased crisis services that this tax itself will create.”
The same overall increase of 2.99% – in line with last year’s limits – is also currently planned at Manchester and Liverpool Boroughs.
But there is still time to change plans. While those amounts are proposed in Manchester’s current budget consultation, which began ahead of the autumn declaration, a council report this month noted that the new higher limits meant that “additional resources over and above the current ones could now be available [medium term financial plan] Adoption”.
Sir Stephen Houghton (Lab), Chair of the Special Interest Group of Municipal Authorities (Sigoma), said council leaders “face the impossible choice of raising and possibly cutting council taxes for disadvantaged families during a livelihood crisis on essential services at the forefront Front.”
“We shouldn’t be in a position where we have to make that choice,” Cllr Houghton said. “Council tax increases should not be used to fund council services, especially nursing services, because it is a regressive tax and the amount levied varies widely across the country, regardless of need.”
Surrey CC can charge twice as much per household for every percentage point increase in council tax compared to Hull or Manchester, according to analysis by Sigoma.
All Mets in England have elections in 2023.
Of the three counties in the sample, none currently plan to take advantage of the full 5% increase.
Staffordshire plans a 2.99% increase, including 1% for the welfare bid. Surrey plans to increase the core tax by 1.99% with no assumptions being made about the bid at this time.
Borough chair Tim Oliver (Con) said this month he had “no expectation at all” that the council tax would be raised by the full allowable amount, according to the Local Democracy Reporting Service.
In Norfolk, current planning is for a 2.99% increase, including 1% by regulation, although there are signs this could change. A report to the Council’s cabinet in October noted that the Section 151 official expected to recommend use of the maximum available increase wherever it was set.
Overall, 61% of the higher administrations and 65% of the districts in the sample plan to implement the maximum increase.
Boroughs planning the maximum increase include Conservative administrations in Charnwood BC and Wealden DC, and Labour-led councilors in Oxford and Cambridge.
Two districts – Mansfield BC and Basingstoke and Deane BC – plan to freeze council taxes next year.
The study is based on the councils’ budget proposals and medium-term financial plans.
When asked if the previous figure of 95% was still the expectation, the Treasury referred LGC to the Department of Leveling Up, Housing and Communities.
A DLUHC spokesman said that setting municipal tax rates is “at the discretion of municipalities” but that local authorities are expected to “exercise caution” including ensuring residents are not overcharged.
Hover over the highlighted municipalities to see their current council tax proposals.
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