LGA analysis: Council tax rises will not fix local government funding crisis

Council tax rises in 2017/18 will not bring in enough money to prevent the need for further deep cuts to local services next year, the Local Government Association has warned.

All councils can raise council tax by up to 1.99 per cent in 2017/18 to fund local services without the need for a referendum – most district councils can increase by £5 per year at Band D level.

England’s 151 social care authorities can increase council tax by up to a further 3 per cent in 2017/18 (up to 4.99 per cent in total). Income from this extra precept must be spent on social care.

With town halls across the country preparing to set their final budgets and council tax levels over the next few weeks, analysis by the LGA reveals:

• 147 of England’s 151 social care authorities are considering or have approved introducing the social care precept in 2017/18 – this would raise £543 million to pay for social care services. The LGA is warning this extra income will be swallowed up by the cost to councils of paying for the Government’s National Living Wage, which could total up to £600 million next year.
• 108 of these councils (72 per cent) are considering or have approved introducing a 3 per cent social care council tax precept in 2017/18. 39 councils (25 per cent) are considering or have approved introducing a 2 per cent social care council tax precept in 2017/18.
• Four councils have announced they will not take up the social care precept and intend to or have frozen council tax next year.
• If all district councils use their full council tax flexibilities in 2017/18 they would raise an additional £60 million to fund local services.

With local government facing an overall funding gap of £5.8 billion by 2020, council leaders warn council tax rises will not prevent the need for continued cutbacks to local services, including social care.

Notes to editors:

1. To demonstrate the scale of the challenge facing councils in meeting the £2.6 billion adult social care funding shortfall by 2020, the LGA has developed an illustrative budget tool that puts people in control of the purse strings to try and set a budget. The figures used are based on an average English local authority where the council must find £17.1 million to make up the adult social care funding gap.