Council tax on the rise thanks to pensions black hole

It's the news that nobody wanted to hear – millions of Britons could face a rise in council tax (again) and cuts in services as local government pension deficits hit £60 billion.

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Back in 2007 a survey revealed that the deficit was up to £23 billion with 83 out of 87 local councils in the red. But since the recession, that figure has nearly trebled and taxpayers will see their council tax bills dependent in part on the size of the pensions black hole.

One in ten funds has recently conducted a new valuation showing that deficits have grown by a whopping 280 per cent. If this valuation were true of every fund, the deficit would amount to more than £60 billion. That means the equivalent of £2,608 for each council tax-paying household in England and Wales and the Government has already alerted town hall chiefs to a possible rise in tax.

In a bid to avoid a sizeable rise, councils may not have to ensure that the pension pot is 100 per cent funded and a plan to raise individual employee contributions and cap taxpayer contributions could also be in the pipeline.

But the Liberal Democrats, who revealed the figures, insist that these measures will only delay the crisis. And, as always, those most in need could be worst hit.

Work and pensions spokesman Steve Webb told the Daily Mail: "A failure to set aside enough money and run the scheme responsibly means millions of people could be faced with bleak service cuts or council tax hikes. Thanks to ministers sticking their heads in the sand many vulnerable people will suffer."

A spokesman for the Department for Communities and Local Government insisted that the figures were "pure speculation".

What do you think? Is this just another case of incompetence or are these gloomy figures merely scare-mongering?