Councils set to avoid tax threshold


File photo dated 25/06/13 of an aerial view of houses in Brighton as nearly one million people are estimated to have taken out a payday loan in the last year to help cover their rent or mortgage costs, according to research from Shelter. PRESS ASSOCIATION Photo. Issue date: Wednesday January 15, 2014. The housing charity said that one in 50 (2%) people it surveyed said they had done this, which would equate to nearly 885,000 adults if the findings were projected across Britain. Shelter said it dealt with just under 9,000 calls to its helpline from people struggling to pay their rent or mortgage last year, rocketing by one third (32%) on the total for 2012. Its findings about the extent to which people are using loans to plug gaps in their finances came from a survey of almost 3,700 people in November who pay rent or a mortgage. See PA story MONEY Borrow. Photo credit should read: Chris Ison/PA Wire

Dozens of English councils are poised to infuriate ministers by raising council tax just short of the threshold that would trigger a referendum.

Almost a third of authorities will again reject the offer of extra central Government funding equivalent to a 1% rise to help them freeze bills, according to the most recent survey, and more than half of those plan to impose a hike of 1.99%, the biggest possible without being forced to seek the approval of voters.

Communities Secretary Eric Pickles - whose desire to halve the cap to 1% was blocked by the Liberal Democrats - has described town hall leaders who go close to the limit as "democracy dodgers".

Research by the Local Government Chronicle - which received responses from 262 of the 353 councils - found that speculation over a tighter limit had influenced behaviour.

Some 14% changed their proposals as a result, with half now planning a tax freeze.

Confirmation of the figures will not come until spending plans have been approved by council meetings across the country over the coming weeks.

Local authorities face a 2.9% cut in overall Government funding for 2014/15 - another reduction to budgets which town hall leaders say are already too stretched to pay for some important services.

The LGC analysis of council papers and responses from finance officers showed 31% (82 councils) planning an increase, with 65% anticipating a freeze and 4% a cut.

Of those not taking up the extra cash, 43 propose a 1.99% rise and 37 between 1.5% and 1.99% with two undecided.

About a third (34%) are Tory-run, 44% Labour and 22% under no overall control or independent.
Britain's only Green Party-led council is planning a referendum to see if there is local support to raise council tax by 4.75%.

LGC editor Emma Maier said: "Councils want to freeze tax for their residents, but many local authorities are under increasing pressure as a result of cuts to their government grant and rising demand for their

"The fact that so many have chosen to increase tax by around 2% rather than accept government funding equivalent to a 1% tax rise is a sign of just how stretched councils are."

Local Government Minister Brandon Lewis said: "Under Labour, council tax bills more than doubled, pushing the typical bill to a £120 a month from hard-working people and pensioners.

"Council tax became a big worry for those trying to balance family budgets. Conservatives have been working to give families greater financial security, taking action to keep council tax down.

"This Government has given extra funding to town halls to help freeze council tax. We have handed local residents new rights to veto big local tax hikes, so local people have the final say on the amount they pay.

"We would encourage every council to take up this year's freeze offer to help their residents with the cost of living."

Sharon Taylor, chair of the Local Government Association finance panel, said: "Local authorities are striving to keep council tax down but at the same time are grappling with the difficult task of protecting vital services like caring for the elderly, fixing the roads and waste collection following a 40% reduction in government funding over this Parliament.

"The very late announcement added to the uncertainty faced by councils in setting their budgets and continuing to deliver vital services. Last year's referendum level was announced in December at the same time as the provisional finance settlement, and there is no reason the same could not have been done this year."

Top 10 council deficits

Top 10 council deficits