Government approves 5% council tax rise amid warnings of service cuts

A planned 5 per cent rise in council tax will "clobber" families recovering from the pandemic at the same time as austerity hits local services, Labour has warned.

In a statement to parliament on Thursday Communities Secretary Robert Jenrick confirmed that English councils would be allowed to raise council tax by up to 2 per cent in 2021/22, on top of a further 3 per cent rise in social care precepts.

Mr Jenrick said local authorities would be given the headroom to decide whether or not to enforce the rises, under a £2.2 billion annual funding settlement available to fund the provision of "critical" public services.

But Labour's shadow communities secretary Steve Reed said local authorities were facing a "vast" funding gap which will "inevitably" lead to job losses and cuts to frontline services.

"Perhaps one of the most shocking aspects of the settlement is the Government's plan to force councils to hike up council tax while the country still faces an unprecedented health crisis and the deepest recession for 300 years," he said.

"The Government is proposing a council tax hike over twice the rate of inflation. The Conservatives have decided to clobber hard-working families when their jobs and incomes are already under extreme pressure. In return, those taxpayers will get fewer services."

Mr Reed labelled council tax as "regressive" as it raises less money in poorer areas, stating: "A 5 per cent increase in Surrey raises £38 million while a 5 per cent increase in Blackburn with Darwen raises just £2.8 million.

"So if you're an older person living in a less wealthy area - such as one of the red wall seats - you're going to see your Conservative MP tax you more but cut the core services you rely on.

"The message to the public is clear - pay more but get less under the Conservatives with Rishi Sunak's council tax hike coming your way in the middle of the worst recession for three centuries."

29 Tory MPs last week called for the tax to be reformed, branding it unfair and saying it had a proportionate impact on younger and low income people.

The charity Citizens Advice has warned that 1 in 7 people are now unable to pay their household bills in the wake of the pandemic, with council tax among those causing problems..

Responding to Labour’s claim, Communities secretary Mr Jenrick said: "Local councils are not under any obligation to increase council taxes.

"And we only have to look at the record of the last Labour government to see what happens under Labour - council tax doubled, under this Conservative Government council tax is lower in real terms today than it was in 2010/11."

He added: "The settlement we're announcing today ensures that councils have the resources they need to continue that work next year, to play their part in the recovery of their communities and to deliver first-class public services.

"As we look ahead to 2021/22, the annual settlement makes an extra £2.2 billion available to fund the provision of critical public services, including adult and children's social care.

"Within this we're giving authorities access to an additional £1 billion for adult and children's social care, made up of £300 million of social care grant and the flexibility of a 3 per cent adult social care precept.

"On average, English councils will see a 4.5 per cent cash terms increase in core spending power, which is also an increase in real terms."

Cllr James Jamieson, chair of the Local Government Association, said: “Today’s settlement provides a potential increase of 4.5 per cent in council core spending power to support vital local services. However, this assumes council tax bills will rise by 5 per cent next year which will place a significant burden on households.

“Council tax rises – particularly the adult social care precept – have never been the answer to the long-term pressures faced by councils, particularly in social care, raising different amounts of money in different areas, unrelated to need. It is not the long-term solution which is desperately needed.

“We have warned about record numbers already claiming a discount on their council tax due to the pandemic and are pleased the Government will provide funding to help councils provide vital support for those on low incomes who may struggle to pay.”