Warning of service cuts despite 5% increase in average council tax bills
Councils have called on the Government to recognise unprecedented financial pressures caused by inflation and rising demand.
Annual council tax bills in England will rise by an average of 5.1% in April, as England’s local authorities warn of cuts to key services due to unprecedented financial pressures.
Government figures released on Thursday show the average bill will be £2,065 in 2023-24, an increase of £99 on the previous year, with 151 of the 153 top-tier councils applying some or all of the maximum 2% precept for social care.
The biggest annual percentage rise will be in London, where bills for an average band D property will increase by 6.2%.
However, the capital’s average bill of £1,789 remains below other areas.
Households in metropolitan areas outside London will see bills rise by 5.1% to an average of £2,059, while largely rural parts of the country will see an increase of 5% to just below £2,140.
The Conservative-led County Councils Network, which represents local authorities providing services to nearly half of the population in England, said the combination of a 4.8% increase in direct local government funding and council tax flexibilities in 2023-24 is not enough to cover rising costs and growing demand.
It added these pressures mean county councils will collectively have to make savings of £1 billion, double the amount of a “typical” year, and use £350 million of reserves to meet their legal requirement to set a balanced budget.
Inflation has added £1.6 billion to budgets this year on top of a £1.4 billion hit in 2022-23, CCN said.
It called on the Government to recognise costs that threaten services such as bus subsidies, streetlights, recycling centres and community health, as councils move to protect social care and highways.
Carl Les, CCN finance spokesman and Conservative leader of North Yorkshire County Council, which covers Rishi Sunak’s Richmond constituency, said: “The additional funding provided by the Chancellor at the autumn statement made a big dent in the unprecedented new costs councils face in 2023-24, but unfortunately it was not enough.
“We understand that residents are in the midst of a cost-of-living crisis, and many of us have reluctantly proposed maximum council tax rises.
“While councils will do all they can next year to deliver these savings whilst protecting vital services, particularly care services, there is already little fat to cut.”
He added that inflation rises are now “embedded into the future” after years of underfunding in county areas.
“The medium-term outlook looks bleak unless these higher costs are recognised and councils are given longer term financial certainty, alongside delivering long-promised fair funding reforms.”
The financial settlement for local government in 2023-24 comprised £17 billion in direct funding, a cash terms increase of £789 million or 4.8% on the previous year.
This means councils’ “core spending power”, which includes council tax revenue, increased by £5.1 billion to £59.7 billion, a rise of 9.4%.
Top tier councils responsible for adult and children’s social care were able to increase council tax to a threshold of 5%, which includes the maximum 2% social care precept, without a requirement to hold a local referendum.
A spokesperson for the Department of Levelling Up, Housing and Communities said: “Council tax levels are set by local authorities and the government maintains a referendum threshold to protect residents from excessive increases.
“We’ve given town halls the biggest cash increase in their spending power in 10 years, with an extra £3.7 billion this year to help them maintain and improve their services and more than £1 billion of additional money for social care.
“We are also providing £100 million of additional funding for local authorities to deliver additional support to most vulnerable households in England.”