Council tax cap to rise to 5.99% in bid to tackle social care funding crisis

By Andrew Woodcock20th December 2017News EnglandBusiness / Funding / Finance, Finance, Government / Politics, Local Authorities, News England, Social Care

Local authorities are to be allowed to raise council tax by up to 5.99% next year, after a further relaxation of the Government-imposed cap to address shortfalls in funding for social care.

But social care service leaders branded the move “woefully inadequate”, while the Local Government Association (LGA) said it would raise just £250 million a year towards a town hall funding gap expected to reach £5.8 billion by 2020.

In his provisional local government funding settlement for 2018/19, Communities Secretary Sajid Javid announced that the threshold for triggering an automatic local referendum was being increased from 2% to 3% of core council tax. Coupled with the 3% additional “precept” permitted to authorities with social care responsibilities, this gives councils freedom to hike bills by up to 5.99% next April without seeking voters’ approval.

Mr Javid told the House of Commons the move would give local authorities “the independence they need to help relieve pressure on local services” while “recognising the need to keep spending under control”.

And he announced the rollout of a pilot under which 10 councils – Berkshire, Derbyshire, Devon, Gloucestershire, Kent & Medway, Leeds, Lincolnshire, Solent, Suffolk and Surrey – will be allowed to retain 100% of business rates raised locally, along with new powers for Police and Crime Commissioners to raise council tax.

But his Labour shadow Andrew Gwynne denounced the package as “piecemeal”, warning that ministers had failed to set out a “sustainable plan” for the future of social care.

And the president of the Association of Directors of Adult Social Services (ADASS), Margaret Willcox, described it as “a further blow” for the sector as it awaits longer-term proposals to resolve its funding crisis in a consultative Green Paper promised for next summer.

The councils with highest levels of disability were likely to benefit least from the additional 1% permitted hike, as they tend to be in disadvantaged areas where the tax base is low, she said.

“Allowing councils to increase council tax by 1% next year is woefully inadequate to address the funding gap facing adult social care, raises least funding in the areas of greatest need and is not the best solution to address the impending crisis facing the sector,” warned Ms Willcox.

“With no fresh funding injection, an increasing number of older and disabled people will not get the care and support they desperately need.

“By the end of this financial year, £6 billion will have been cut from councils’ adult social care budgets since 2010 – with need for our services growing all that time.”

LGA chairman Lord Porter warned that councils were approaching “a financial breaking point which will threaten the existence of some local services”.

“Years of unprecedented central Government funding cuts have left many councils beyond the point where council tax income can be expected to plug the growing funding gaps they face,” said the Conservative peer. “Local government faces an overall funding gap of £5.8 billion by 2020.”

Calling for the abolition of the referendum trigger, Lord Porter said: “While some councils will receive extra funding next year, the Government needs to provide new funding for all councils over the next few years so they can protect vital local services from further cutbacks.”

And the co-chair of the Care and Support Alliance, Caroline Abrahams, said that the settlement would spark “real and mounting concern” about the prospects for older and disabled people in 2018.

“Without an urgent injection of cash we worry that more care providers and care workers will quit and that the search for good, affordable care will become even more desperate in many areas than it already is,” said Ms Abrahams.

The TaxPayers’ Alliance (TPA) pressure group said it “beggars belief” that Mr Javid was allowing council tax to rise more quickly at a time of below-inflation pay rises.

TPA chief executive John O’Connell said: “With wage growth stagnating and the cost of living on the rise, it beggars belief that politicians are asking for powers to take even more of people’s hard-earned money.

“Council tax has already nearly doubled in the last decade so it isn’t fair to ask residents to plug the gaps in their finances, especially when we know that council tax already hits the poorest hardest. Councils should instead continue to root out waste and scrap any item of spending that does not help provide an essential service.”

If all local authorities imposed the maximum rise permitted without a local referendum, the average Band D council tax bill in 2018/19 could be £1,653.30 – an increase of 5.8% on 2017/18.

Mr Javid’s Department for Communities and Local Government said this would still leave average Band D council tax bills lower in real terms – after inflation is taken into account -than in 2010/11.

A DCLG spokesman said: “This settlement strikes a balance between giving councils the ability to make decisions to meet pressures and ensure that our most vulnerable in society get the support they need while protecting residents against excessive council tax bill rises.”