Council tax will go up in autumn statement, Jeremy Hunt tells MPs

Chancellor rejects Labour plea to hold down bills – as Tory manifesto promised – pointing to ’very difficult announcements’

Council tax will go up following this week’s crucial autumn statement but the wealthy will feel most of the pain, Jeremy Hunt has said.

The chancellor rejected a plea from Labour to hold down bills – as the Conservative 2019 election manifesto promised – insisting some “very difficult announcements” are unavoidable on Thursday.

“We are going to be asking everyone to contribute more – but we’ll be asking people who have more, to contribute even more. And that will be reflected in our decisions on council tax,” Mr Hunt told MPs.

The Treasury could also be considering making it easier for town halls to hike council tax without the need to gain the permission of local residents in a referendum.

Currently, increases of more than 2.99 per cent trigger a referendum – or 1.99 per cent where councils are not responsible for social care – but this could be hiked as high as 5 per cent.

Labour’s Chris Bryant warned relying on council tax to plug spending gaps would be “entirely counterproductive” and “could actually make local authorities even more unsustainable”.

The levy, based on long outdated property values 30 years ago, is widely recognised as regressive with only a tenuous link to the ability to pay.

Mr Hunt did not dispute the warning about higher council tax, but told Mr Bryant: “It is going to be a very difficult announcement on Thursday.”

During Treasury questions, the chancellor declined to set out what “targeted support” will be provided to hold down energy bills – when a six-month freeze on bills ends in April.

Mr Hunt has previously said across-the-board help will finish – calling it too expensive – with the average annual bill expected to rise by about £600 to around £3,100.

The SNP’s Alison Thewliss warned of even higher bills, telling the chancellor: “Come March, when the energy support ends, Cornwall Insight have estimated that the price cap will rise to £3,700.”

In reply, Mr Hunt said only that “the energy price support that we give to families will not end from next April, and I will be announcing on Thursday what that support will be”.

On Thursday, the autumn statement is expected to usher in a fresh era of austerity, with up to £35bn of spending cuts and £20bn of tax increases.

Mr Hunt echoed Margaret Thatcher’s much-ridiculed comparison of the nation’s economy to a household budget as he defended the looming squeeze.

“Margaret Thatcher said that there is nothing moral about spending money you do not have... that it passes on the burden to future generations to pay it back,” he argued.

“Currently, our debt to GDP ratio is about 98 per cent and we are currently spending £22bn more on debt interest in the year to date than at the same time last year.

“That’s more than the entire budget of the Home Office – so I absolutely agree with her,” he told MPs.