Senior council representatives across the country have indicated to LGC that the government is misguided if it expects councils to cover their losses by hiking the social care precept above current referendum threshold limits, amid fears councillors would be punished at the ballot box for doing so.

There is now widespread speculation that the government will remove the referendum cap threshold for the adult social care precept – and potentially for council tax itself too – in the expectation that councils will then use this to cover funding gaps.

The Institute for Fiscal studies today warns that council tax rises of at least 3.6% are likely to be needed over the next three years simply to maintain services at pre-pandemic levels.

But many believe this expectation is wrong. One senior source close to the sector told LGC they believe that “no council will do the type of rises they need to close their funding shortfall” and that “councils will cut services instead”.

Having spoken to a number of council leaders, they said the feedback was that “hiking up council tax is seen as neither feasible or acceptable”.

“No authority will put up their council tax by more than 4%,” claimed the source. “Government are making the assumption that councils will put up tax heavily because most are currently outside of the elections cycle, but that’s wrong. The general feeling is council tax has gone up too much in recent years. The electorate won’t stomach it.”

There are also widespread concerns that indiscriminate council tax rises would go against the government’s levelling up ethos.

Last year, when councils were able to levy a 3% adult social care precept without having to hold a referendum, the government provided a £300m equalisation grant so deprived areas would not lose out. But the source pointed out that the job of trying to equalise adult social care funding nationally would become more difficult if councils are able to hike the precept by however much they like.

Surrey CC leader Tim Oliver, who is also chair of the County Councils Network, told LGC that in his area, a 1% council tax rise raises around £7.5m, while “in many other areas it’s a tiny, tiny number”. “So that’s not going to solve the problem nationally,” he  said.

“We only …….

Source: https://www.lgcplus.com/finance/hiking-council-tax-neither-feasible-nor-acceptable-say-leaders-07-10-2021/

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