Council Tax rises set to be introduced to fund care crisis

By Dan Bloom & Jayke Brophy

A rise in Council Tax for the next three years is set to be announced to raise money for care homes, a top independent think tank has warned.

The Mirror reports that The Institute for Fiscal Studies said a rise of at least 3.6% will be needed for councils to keeps services running to the level they were prior to Covid.

However, this figure would likely be the minimum needed according to the IFS, and extra pressures could result in bills rising by the legal maximum of 5% each year.

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Councils will finalise their tax rises in February and March, with overall principles set out by Chancellor Rishi Sunak in his annual Budget later this month.

The IFS stated that social care aims, announced by the Government last month, are currently underfunded. They said that the aims would cost £5 billion a year in the long term - almost three times the additional funding allocated over the next three years.

Kate Ogden, a research economist at IFS and an author of the chapter, said: "The Government has stepped up with billions in additional funding for councils to support them through the last 18 months, it is likely to have to find billions more for councils over the next couple of years if they are to avoid cutting back on services, even if they increase council tax by 4% a year or more.

"The coming financial year is likely to be especially tough, with the likelihood of at least some ongoing Covid-19-related pressures, and a particularly tight overall spending envelope pencilled in.

"At the same time, Government needs urgently to deal with a local government funding system which is becoming hopelessly out of date, being based on population levels and characteristics in 2013.

"This results in manifest unfairness in the distribution of resources between councils."

The average Band D council tax bill is currently £1,898 a year - and a 5% rise to that would bring it to £1,993 in 2022/23.

Further 5% rises would then cause that amount to skyrocket to around £2,093 in 2023/24 and £2,198 in 2024/25.

Average Band D bills have risen by between 3.9% and 5.1% every year for the last five as the Tories pile the responsibility of paying for the care crisis onto town halls.

It means the average council tax bill for a Band D home in England has soared from £1,439 in 2010/11 to £1,898 this year.

The Local Government Association (LGA) said ministers would not be able to rely on council tax rises alone to achieve their social reform goals.

James Jamieson, LGA chairman, said: "Councils continue to face severe funding and demand pressures that will stretch the local services our communities rely on to the limit.

"Securing the long-term sustainability of local services must therefore be the top priority in the spending review.

"The significant financial pressures facing local services cannot be met by council tax income alone.

"Councils are particularly alarmed that the Government's solution for tackling social care's core existing pressures appears to be solely through the use of council tax and the social care precept."

It is believed that further information on potential council tax rises will be made more clear by the Chancellor during his Budget announcement this month.

A spokesperson for the Government said: "The Government has allocated more than £12 billion directly to councils since the start of the pandemic - with more than £6 billion available to spend as they see fit - recognising that councils are best placed to deal with local issues.

"We have also taken historic action to fix the social care crisis - the Health and Social Care Levy will raise £12 billion a year to fund the NHS and social care.

"The Spending Review will continue to focus on supporting jobs and delivering the public's key priorities."

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