Council tax increases to 5%

Jeremy Hunt will use the Autumn Statement tomorrow to give local authorities the right to raise council tax by a maximum of 4.99 per cent from 2.99 per cent before having to put the increase to a local referendum, according to people familiar with the plan. If taken up in total, a 4.99 per cent rise would increase the average bill for a typical family home, covered by council tax band D, to more than £2,000, exacerbating the cost of living crisis for millions of households. But the Local Government Association warned that the scale of funding gaps faced by councils was too big to be plugged by council tax increases. «While council tax is an important funding stream, it has never been the solution to the long-term pressures facing councils,» said James Jamieson, chair of the LGA, warning that the financial sustainability of local services was now on a «cliff edge».

The entire rise in council taxes, if taken up by three-quarters of all councils, would raise about £2bn by 2026, said Phil Woolley, head of public sector consulting at Grant Thornton, the business and financial advisers, but this would still leave an overall financing gap of £5.3bn to £7bn in four years. Manchester City Council leader Bev Craig said every one percentage point rise she put through would raise £2mn, compared with £7mn in Kent, making the government’s plans «unsustainable and unfair».

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