Councils can add extra one per cent onto council tax bills

Speaking in the House of Commons, Communities Secretary Sajid Javid has announced that councils will be allowed to increase their core council tax.

Stating that ‘councils need greater control of the money that they raise’, Javid revealed his draft local government finance settlement, which included plans that give councils the ability to increase their core council tax requirement by an additional one per cent without a local referendum.

Javid also discussed the latest phase of the government’s business rates retention programme, aiming for local authorities to retain 75 per cent of business rates from 2020 to 2021, and an extension to the 100 per cent retention pilots, which will now be coordinated in 11 further regions across England. The business rates retention programme will continue into 2019/2020.

The Communities Secretary additionally announced an increase the Rural Services Delivery Grant by £15 million in 2018 to 2019, and a continuation of capital receipts flexibility programme for a further three years.

Lord Porter, Chairman of the Local Government Association, said of the speech: “Greater flexibility for local authorities in setting council tax levels will give some councils the option of raising extra money to offset some of the financial pressures they face next year. With no other national tax subject to referenda, the council tax referendum limit needs to be abolished so councils and their communities can decide how under-pressure local services are paid for, with residents able to democratically hold their council to account through the ballot box.

“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. Local government faces an overall funding gap of £5.8 billion by 2020. Children’s services, adult social care and homelessness services are at a tipping point as a result of funding gaps and rising demand and increasingly little is left to fund other services, like cleaning streets, running leisure centres and libraries, and fixing potholes. 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.”

Paul Carter, chairman of the County Councils Network and leader of Kent County Council, added:
“This year’s finance settlement comes at the most challenging era for counties in recent memory and evidence shows that there are a significant proportion of county frontline services that are at risk. Counties collectively face a funding black hole of £2.54 billion by 2021. We are therefore disappointed that the government has not heeded our calls for additional funding through the extension of transitional grants introduced in 2016. With no replacement announced for the vital £292 million of transitional funding counties received over the past two years this further exasperates the precarious position of rural county services. Without additional resources our member councils will be unable to safeguard some highly valued frontline services.”