Council tax to rise, as councils defy Coalition freeze


Eric Pickles David Jones/PA Wire

Eric Pickles, the Communities Secretary, has announced another round of deep and painful cuts to local government funding. He called on councils not to respond by putting up council tax, but there are early signs that almost one in five councils intend to defy him.

So what does this mean for you?

Funding cuts

The funding cuts are extraordinary. The government says that on average the 'spending power reduction' will be 1.7%. However, some will see cuts of up to 8.8%. They come on top of the dramatic cuts announced last year.

Sir Merrick Cockell, Chairman of the Local Government Association, said this 'spending power reduction' figure doesn't reflect the huge scale of the funding cuts:"What was scheduled to be an extremely challenging 28% reduction in council funding will now exceed 33% and, for some councils, may go much higher."

The government is factoring in a few steps it has taken in order to soften the blow. From next year council will be able to keep much more of the money raised within the area - rather than having it brought together nationally and then having to ask for grants from it. The government is also setting aside an extra £450 million over the next two years to help local councils freeze their council tax.

Services cut

However, this still means huge cuts are required. Many councils have already started cutting a deep swathe through services. Councils in England have cut costs of £5 billion - including 230,000 jobs over two years.

Council leaders in Liverpool, Birmingham, Nottingham, Sheffield, Newcastle, Manchester and Leeds wrote an open letter to Pickles claiming that: "The cuts we are now being asked to make in the years ahead will go far beyond the level at which we can protect vital local services."

They added: "Combined with unprecedented spending pressures, particularly in the social care services, the cuts we now anticipate will leave us unable to provide anything like the range or quality of public services we believe our citizens have a right to expect."

Council tax rises

Some councils are responding with plans to raise council tax. Last year they were allowed to increase it 3.5% - any more and they would have to put it to a local referendum. This year the rise has been capped at 2% - partly in response to the fact that last year so many councils raised tax just a fraction under the 3.5% threshold.

According to a survey by the Local Government Association, 22.4% of local councils are planning to increase their council tax. That's up from 10% last year.

Pickles objects

Pickles angered local councils by issuing a booklet called '50 Ways to Save', designed to instruct them on how to save money. He said: "All councils have a moral duty to freeze council tax. If councils get their house in order and cut out the lavish expenditure they will be able to take up the council tax freeze, which offers a further year of practical help to hard working families and pensioners across the country."

His point is that: "Councils must keep doing their bit to tackle the inherited budget deficit because they account for a quarter of all public spending and still get through over £114 billion of taxpayers money each year."

But what do you think. Is Pickles right, are there plenty of ways left to save, or is he going too far and hurting us all? Let is know in the comments.