GB News: Expert discusses potential rise in Council Tax
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Council tax increases under current Government spending plans, the Institute for Fiscal Studies said, will need to be at 3.6 percent per year for the next three years. This would be to ensure councils can provide the same range and quality of services as offered pre-pandemic. The think-tank estimates the average annual bill paid by households would increase by £160 by 2024/25, or £77 after accounting for inflation.
However, it also warned this was likely to be the minimum acceptable requirement, and that it was more likely councils could easily increase the necessary rise to five percent per year – or over £220 by 2024/25.
People will usually have to pay council tax if they are over the age of 18, and own or rent their home.
A full bill is based on at least two adults living in a home, and spouses and partners who live together are jointly responsible for making sure the bill is met.
There may be discounts available for those who live on their own, or if no-one in the home counts as an adult, for example.
The reason for potential council tax rises has also been pegged to social care funding, and the Government’s ambitions to reform the system.
The IFS has said these are currently “underfunded” and could cost £5billion per year in the long term, which is almost three times the additional annual funding currently allocated over the next three years.
The warning comes as part of a chapter published by the think-tank, with the rest of the information due to be published shortly before the autumn Budget and Spending Review.
It has highlighted the potential financial burden Britons will need to take on, which could exacerbate already existing cost of living rises.
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Kate Ogden, a research economist at IFS, and an author of the chapter, said: “The Government has stepped up with billions in additional funding for councils to support them through the last 18 months.
“It is likely to have to find billions more for councils over the next couple of years if they are to avoid cutting back on services, even if they increase council tax by four percent a year or more.
“The coming financial year is likely to be especially tough, with the likelihood of at least some ongoing COVID-19-related pressures, and a particularly tight overall spending envelope pencilled in.
“At the same time, Government needs urgently to deal with a local Government funding system which is becoming hopelessly out of date, being based on population levels and characteristics in 2013.
“This results in manifest unfairnesses in the distribution of resources between councils.”
The IFS warned council tax rises alone, however, may not be sufficient enough to deal with the increasing pressure.
It projects that an increase of four percent in April 2022 may still leave councils across England with a £2.7billion funding gap in 2022/23.
This would mean there might need to be larger percentage increases in council tax bills to meet rising costs in poorer parts of the country. Alternatively, the IFS added, the Government could redistribute more grant funding to these areas.
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David Phillips, Associate Director at IFS and another author of the chapter, said: “The recently announced social care reforms pose major challenges for councils across England.
“The funding announced by Government so far is unlikely to be enough to meet all of its objectives, in either the short or longer term.
“Without sufficient funding, councils may find themselves having to tighten the care needs assessments further in order to pay for the care cost cap and more generous means-testing arrangements.
“That would see some poorer people who would now be eligible losing access to council-funded care, so that coverage can be extended to other, typically financially better-off, people.”
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