30 January 2024 , 08:32
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Millions of households face being clobbered by council tax hikes of up around £100 in the Spring as town halls face a funding crisis.
Levelling Up Department officials have reportedly told local authority leaders they expect the maximum 4.99% increase to be applied to council tax bills in April in a £2 billion raid. The increases would add around £100 to a typical bill for a band D property in England, according to the Guardian.
Chancellor Jeremy Hunt allowed allowed cash-strapped local authorities to increase council tax by up to 5% without calling a referendum in his first Autumn Statement in 2022. Research by the Mirror last year found three quarters (76%) of local authorities planned to impose the maximum 5% hike.
It comes as Rishi Sunak plots pre-election cuts to income tax, which would likely be funded by further squeezes to public services and welfare. But David Phillips, an economist at the Institute for Fiscal Studies, said the hikes would hurt the poorest families as council tax represents a larger share of their monthly bills. He said: “Increasing council tax while cutting most direct taxes – for example, national insurance, income tax and especially capital gains tax and inheritance tax – would 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 "crucial social care services for their local communities, particularly children".
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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 quick fix to keep the wolf from the door in an election year". 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 need a long-term sustainable funding settlement".