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Nearly all local authorities in England are raising council taxes by the maximum amount permitted, according to new data that shows poorer parts of the country are being disproportionately affected.
For the second year in a row, the council tax on benchmark mean value properties will rise on average by 5.1 per cent, reaching £2,171 in 2024-25, figures released by the Department of Levelling up, Housing and Communities showed on Thursday.
The current cap on council tax rises is set by central government at 4.99 per cent but can be higher in some areas depending on the powers of the local authority, with almost every town hall using their maximum allowance.
While the increases were not unexpected, think-tanks and local government groups said the data highlighted stark regional disparities, with poorer areas in the north in particular forced to raise the levy more than richer areas. People across the board were paying more and more for increasingly threadbare services, they added.
“We are sleepwalking into a disaster as far as local authority finances are concerned,” said Zoe Billingham, director of the Institute of Public Policy Research North.
Calling for fundamental reform of the way local government raises funding, she noted that councils needed an emergency cash injection of up to £4bn to stabilise their finances and safeguard services over the next two years.
“Council tax is regressive with respect to property values to the benefit of wealthier residents in places like London and at the cost of less well-off residents in places like the North East of England,” she said.
The Chartered Institute of Public Finance and Accountancy (CIPFA), which represents accountants working in the public sector, estimates that households in the North East will pay £420 more in council tax for an average property in 2024-25 than those in Greater London.
Its analysis found that the average benchmark mean value (or “band D”) property in Greater London will rise by £105.57 to £1,894, while in the North East it will go up by £112.14 to £2,315.
Some analysts said the government’s decision to pursue tax cuts ahead of the general election this year had heaped pressure on local authorities to raise their tax revenues.
“With central government prioritising cuts in taxes and consequent spending cuts, this places more burden on councils to increase the level of council tax by the maximum allowed,” said Rob Whiteman, CIPFA chief executive.
“Many residents will see a reduction in the level of service provided,” he added.
According to analysis released this week by the County Councils Network, councils are spending over £200 per person more on children’s services and adult social care compared to a decade ago, with these two responsibilities now consuming two-thirds of the average local authority’s budget.
“This has loaded the cuts into the most visible parts of where people judge the state,” said Tony Travers, professor in the department of government at the London School of Economics.
The Department for Levelling Up, Housing and Communities said it recognised the challenges facing councils, which was why it had announced an additional £600mn support package in January. But it had no plans for a nationwide revaluation of the way council tax is calculated.
“Councils are ultimately responsible for their own finances and for setting their own council tax,” it said.
Source: Economy - ft.com
