Millions of households face being clobbered by council tax hikes of up round £100 within the Spring as city halls face a funding disaster.
Levelling Up Department officers have reportedly advised native authority leaders they count on the utmost 4.99% enhance to be utilized to council tax payments in April in a £2 billion raid. The will increase would add round £100 to a typical invoice for a band D property in England, in accordance with the Guardian.
Chancellor Jeremy Hunt allowed allowed cash-strapped native authorities to extend council tax by as much as 5% with out calling a referendum in his first Autumn Statement in 2022. Research by the Mirror final yr discovered three quarters (76%) of native authorities deliberate to impose the utmost 5% hike.
It comes as Rishi Sunak plots pre-election cuts to earnings tax, which might probably be funded by additional squeezes to public providers and welfare. But David Phillips, an economist on the Institute for Fiscal Studies, mentioned the hikes would harm the poorest households as council tax represents a bigger share of their month-to-month payments. He mentioned: “Increasing council tax whereas reducing most direct taxes – for instance, nationwide insurance coverage, earnings tax and particularly capital beneficial properties tax and inheritance tax – could be regressive.”
Last week, Levelling Up Secretary Michael Gove unveiled an emergency £500million package for struggling local authorities amid warnings that more councils could go bust. The Communities Secretary the cash injection was to help councils provide “essential social care providers for his or her native communities, notably youngsters”.
But Labour branded it a “sticking plaster” over local councils’ huge financial worries, while the trade union Unison accused the Tories of delivering a “panicked fast repair to maintain the wolf from the door in an election yr”. Nottingham City Council became the latest authority to declare itself effectively bankrupt in November, following Birmingham City Council and Woking Borough Council. Seven councils have issued at least one section 114 notice – a formal declaration they can’t balance the books – since 2020.
More than 40 Conservative backbenchers had written to Rishi Sunak, which was organised by the County Councils Network (CCN), warning they will be forced to cut crucial frontline services and increase council tax if they don’t get emergency cash. They welcomed the funding but warned that “councils want a long-term sustainable funding settlement”.