Bigger council tax rises will not prevent more cuts to services, councils say

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Increasing council tax bills next April will hit struggling residents, fail to lift the pressure on cash-strapped local authorities and will not prevent more cuts to key services, from social care to waste collection and libraries, local government leaders have said.

Average council tax bills could rise by as much as ?100, to more than ?2,000 for households in band D, from April, after the chancellor, Jeremy Hunt, confirmed in the autumn statement that the cap on how much local authorities could raise rates would be relaxed.

Higher council tax bills will be expected to part-finance a planned cash injection for adult social care budgets of up to ?7.5bn over the next two years, an announcement welcomed as a recognition by the government of the crisis engulfing the sector, but offering it only short-term respite.

Local authorities with social care responsibility will be given the flexibility to uprate council tax bills by up to 5% (including a 2% social care levy), while others can impose rises of up to 3%. The current limits are 3% and 2% respectively.

Councils will face tough decisions over whether to exploit the new rules to provide a little relief for their battered balance sheets, knowing that increased bills will mean more pain for hard-pressed families during a cost of living crisis.

However, even if three-quarters of local authorities in England were to raise council tax by the maximum allowed, it would reduce the local government sector’s funding shortfall – estimated at ?9bn by 2025-26 – by just ?2bn, according to the consultancy firm Grant Thornton.

The social care funding announced by Hunt on Thursday was significantly less than the ?7bn-a-year increase he called for two years ago when he was chair of the Commons health and social care committee. It is unclear how far it will materially ease the sector’s deep-seated staffing and capacity problems.

Mike Padgham, chair of the Independent Care Group, which represents care home providers, said: “The extra money is welcome, but will it increase staff pay to tackle the 165,000 vacancies in social care staff? No. Will it help us make inroads into the 1.6 million [people] who can’t get care? Very little, if any.”

There was relief from councils that the introduction of a flagship Tory policy to cap lifetime social care fees at ?86,000, due to begin next year, had been delayed until October 2025, amid warnings that fragile local care services needed more time to prepare for the changes.

However, the delay will disrupt the plans of thousands of people banking on promised support with potentially calamitous care costs. The Tory chair of the Commons health and social care committee, Steve Brine, said the delay meant “more people face the very real prospect of crippling bills”.

Jennifer Dixon, chief executive of the Health Foundation thinktank, said it was the latest shelving of a measure originally proposed a decade ago. “The government has chosen to prolong a major public policy failure that leaves older and disabled people without the care they need and many facing catastrophic costs,” she said.

Overall, with the chancellor maintaining local government spending next year at current levels, there was little relief for councils battling with the unexpected multibillion-pound costs of soaring wage and energy bills, or for users of local authority services that face further cuts.

The chair of the Local Government Association, James Jamieson, said that while the financial outlook for councils was “not as bad as feared” for next year, the reliance on council tax would not solve the long-term pressures on high-demand services such as adult social care, child protection and homelessness.

Sir Stephen Houghton, chair of the LGA special interest group of municipal authorities, which represents some of the biggest city councils outside London, said councils faced a substantial real-terms cut in spending power that would have “a significant impact on key frontline services and regeneration projects”.

The District Councils’ Network vice-chair, Sharon Taylor, said: “Every individual and every community will feel poorer as district councils inevitably find they have no option but to cut back on environmental services, waste collection, leisure and parks. These services improve everyone’s quality of life.”

Social housing tenants face rent rises of 7% from next April, the chancellor announced. While this is less than the 11% they might have expected under the standard rent-setting formula, it still amounts to a substantial rise for households who pay full rent.