Is council tax going up? Most areas in England to see 5% riseon November 18, 2022 at 3:11 pm

Most English councils are expected to raise council tax by 5%, according to the Treasury.

Chancellor Jeremy Hunt on Thursday announced English local authorities will be able to increase council tax by 5% annually without a referendum.

Councils warned an increase would be “extremely difficult” for people given the cost-of-living crisis, but 95% are expected to opt for the full rise.

Mr Hunt insisted his plan would get the UK through an economic “storm”.

Treasury analysis predicted almost all councils would increase payments by the full 5% permitted.

It means in some areas the average Band D council tax bill could go over £2,000 for the first time, although other areas already pay more than that.

Council tax pays for local budgets and can be spent as the local authority sees fit, according to the House of Commons library.

“It is not possible to say that council tax pays for particular local services: it is pooled with revenue from business rates, government grants and other sources of income,” the library says.

Currently a referendum is triggered if councils want to raise council tax by more than 2%, although they can also raise it by a further 1% specifically for social care.

Following the Autumn Statement, local authorities will be allowed to raise council tax by 3% and those which also have social care responsibilities can also increase it by a further two percent (a total increase of 5%) without a local vote.

The Local Government Association (LGA), which represents 331 of the 333 councils in England, said although the financial outlook looks better, council tax would not plug their shortfalls.

LGA chairman councillor James Jamieson said: “We have been clear that council tax has never been the solution to meeting the long-term pressures facing services – particularly high-demand services like adult social care, child protection and homelessness prevention.

“It also raises different amounts of money in different parts of the country unrelated to need and adding to the financial burden facing households.”

Councillor Shaun Davies, council leader for Telford and Wrekin Council and leader of LGA Labour, said he was not willing to increase council tax because his residents can not afford it, but assumes government will order local authorities to increase council tax by at least 2% for the social care levy.

Speaking to the BBC Radio Shropshire, he described residents telling him about the price of food rapidly increasing and homeowners contacting the council for housing advice because they could not afford their mortgage.

He said: “In all consciousness I can’t increase council tax at a time when families are struggling.

“That will mean tough decisions for us as a council, as a result of that underfunding from government and the low council tax that we receive already.

“But I’m not prepared to put onto families and households more tax as a result of this budget.”

He added the Autumn Statement meant there would be further cuts to public services at time when it requires “urgent resuscitation” and the demand is “going through the roof”.

The County Councils Network, which represents 36 mainly Conservative authorities, said despite Mr Hunt’s plan they still face “very difficult decisions” alongside high inflation and rising social care costs.

Chairman Tim Oliver said “some county leaders may be reluctant” to impose 5% hikes “during a cost-of-living crisis considering ratepayers in county areas currently pay the highest bills on average”.

Councillor Georgia Gould, chair of London Councils, said that borough finances remained in a “critical condition”. She maintained that council tax was “not the answer” and said the rise made the cost of living crisis “extremely difficult for struggling households” and “it could never plug that £700m funding gap”.

Labour’s shadow chancellor Rachel Reeves told BBC News: “If you look at what’s happening in March next year, I am very worried about a whole range of things that are set to happen at the moment.

“Big increases in gas and electricity bills, the increases in council tax, the increases in income and the increases in fuel duty.”

The independent Office for Budget Responsibility said the government’s plan will raise £3.3bn in 2026/27, rising to £4.8bn in 2027/28.

The Ministry for Housing, Communities and Local Government (MHCLG) has been approached for comment.