Leaders of councils in England have expressed disapproval towards Rishi Sunak’s request for local authorities to exercise “restraint” in raising council tax rates. They argue that the government is responsible for insufficient funding.
The prime minister urged officials to exercise caution when implementing council tax increases. He emphasized the importance of local councils being mindful of the financial burdens on families.
He specifically criticized the councils in England that are seeking approval to increase council tax by over 5% in order to address their budget concerns during a widespread shortage of funding for local authorities.
Despite the government granting permission for several councils to exceed the 5% tax cap, such as Thurrock, Woking, Slough, and Birmingham, Sunak still made comments opposing the decision. However, Somerset’s council leaders were not given the same allowance as they work to address a budget deficit of £100m.
Last month, The Guardian reported that authorities in Michael Gove’s Department for Levelling Up, Housing and Communities instructed councils to increase council tax by the maximum rate of 4.99% in April. Some Conservative officials expressed concern that this may undermine the impact of national tax reductions expected in next month’s budget.
Sunak stated in an interview with BBC Radio Somerset that it is crucial for councils to keep the cost of living manageable for their residents. He expressed disapproval towards councils who are requesting the government’s permission to implement excessively high increases in council tax.
However, Sir Stephen Houghton, the Labour leader of Barnsley council and head of a group of 48 urban authorities in the north, Midlands and south, said it was “remarkable” for the prime minister to call for restraint when the government had underfunded councils.
“For the past 13 years, the government has reduced the amount of revenue support grants given to councils. As a result, councils have had to raise council tax in order to make up for this deficit,” he stated. “In recent years, the government has instructed councils to utilize increases in council tax to cover the costs of adult social care.”
The retention of business rates schemes has resulted in reduced funding for the neediest councils by the government. This has created a £4 billion gap in funding for essential services, and the government has chosen not to fill this gap – a decision made by the government.
Local governments seeking to increase taxes beyond the 5% limit must obtain approval from the national government or conduct a community vote. The county of Bedfordshire is the sole council to have carried out a referendum on this matter, which was ultimately voted against by residents in 2015.
Nesil Caliskan, and councillor and the leader of the Local Government Association (LGA) Labour group, said: “Rishi Sunak is out of touch with working people and the public services they rely on.
The reduction of council funds by consecutive Conservative administrations is the cause of the poor condition of local government.
Local governments have exhausted all options for generating funds to address the increasing needs for homelessness, child welfare, and adult social services.
Pete Marland, a member of the local government and the leader of the LGA’s board for economy and resources, stated that the funds provided to councils do not align with the responsibilities they have been given.
“Councils have been proactive in finding solutions to save funds and cut expenses, and this effort will persist. However, they will still need to increase council tax this year and potentially make additional cuts to local services in order to address any remaining funding deficits.”
As stated by the levelling up, housing, and communities committee, the increasing costs and demand will continue to strain council budgets.
Unless additional funds are provided, certain councils may face difficulties in creating financially stable budgets for the years 2024-25 and could potentially be unable to do so when planning for 2025-26.
The amount of money given to councils by the central government decreased by 40% between 2010 and 2020. In recent years, eight councils in England, such as Birmingham, Nottingham, and Croydon, have released section 114 notices which essentially declare them as bankrupt.
Last month, Gove declared that the government plans to allocate £600m to support local government funding in order to avoid additional councils from facing financial collapse.
The members of parliament on the local government select committee cautioned that an investment of £4 billion by ministers would be necessary to prevent a potentially disastrous financial situation that could negatively impact services, such as adult social care and child protection.
Source: theguardian.com
