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Wednesday 25 May 2016

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Council tax outside capital 'will rise by up to 4%'

Published 11/03/2016

London is maintaining a virtual freeze but outside the capital, councils are taking full advantage of the 1.99% maximum increase permitted
London is maintaining a virtual freeze but outside the capital, councils are taking full advantage of the 1.99% maximum increase permitted

Council tax payers across England are facing rises of up to 4%, while authorities in London maintain a virtual freeze in 2016/17, according to new figures.

Many councils outside the capital are planning to take full advantage of the 1.99% maximum increase permitted without a local referendum, as well as the 2% precept which Chancellor George Osborne is allowing for authorities providing adult social care, the Chartered Institute of Public Finance and Accountancy (Cipfa) found in its annual council tax survey.

Outside London, Cipfa found councils were planning an average rise of 3.6%, adding £54 to the average Band D bill. But Greater London council tax payers will see an average increase of just 0.6% or £8.04.

Across the country, households will see the largest increase in council tax since 2008, which Cipfa said reflected cuts to the main grants paid to local councils by central government.

To meet Office of Budget Responsibility (OBR) projections, outlined in November's Spending Review, council tax will need to rise by 3.8% per year over the next four years, potentially adding £181 to the average Band D bill in England by 2020, said Cipfa. This comes after years in which the Government offered councils financial support to help them freeze council tax bills.

Cipfa chief executive Rob Whiteman said: "Councils have made by far the biggest efficiencies in the public sector and with the government incentives over the last parliament, council tax has remained relatively static.

"But things have changed. Councils are effectively being encouraged by government to raise council tax, which marks a contrast to its stance in previous years.

"Over the next four years, government will be making fundamental changes to how councils are funded, essentially withdrawing Whitehall grants by allowing councils to keep more local business rates. This is a very positive move for local democracy, but there must be clarity on the detail of the new system to show how relatively less well-resourced authorities will fare."

According to Cipfa's survey, which received responses from 314 councils, inner London is the area with the lowest average Band D increase in 2016/17 at £4.96, while the North East has the highest at £59.62.

Communities Secretary Greg Clark said: "Our historic four-year funding deal for councils both gives them certainty to plan ahead and meets the clear request to prioritise care for our elderly population with a £3.5 billion social care funding package.

"It means councils have the freedom to set a social care precept as part of local bills, with excessive council tax increases still subject to local referendum to protect council taxpayers.

"Even with these changes, council tax will still be lower in real terms in 2019/20 than in 2009/10 - and this year's increase will still be lower than the average 6.2% annual increase between 1997 and 2010."

Dia Chakravarty, political director at the TaxPayers' Alliance, said: "Councils pleading poverty seem to forget that hard-pressed families are already struggling with an ever-increasing tax burden.

"Our own research shows some councils have been prioritising increasing councillors' allowances over cutting tax and finding necessary savings and that's simply unacceptable.

"Every bit of unnecessary spending must be cut out before taxpayers are asked to dig deeper into their pockets."

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