Ministers have told local authorities to keep council tax rises low amid reports that some are considering referendums on increasing charges by as much as 16% to cope with holes in their social care budgets.
Sajid Javid, the communities secretary, announced earlier this month that he would allow councils to increase charges by an additional percentage point, meaning bills could rise by almost 5%, rather than the 4% cap originally planned.
More than half the increase will be ringfenced for adult social care. However, councils have warned that they may need to raise substantially more.
Since 2012, councils, fire services, and police and crime commissioners have been required to hold a referendum if they wish to increase council tax by more than the cap set by central government.
On Friday, Surrey county council did not deny reports that it was considering a referendum on a double-digit council tax increase because of its precarious financial situation, but local Conservatives said they did not recognise the figure of 16% reported in the Daily Mail.
Javid’s department said it was government policy to keep council tax bills low. A Department for Communities and Local Government spokesman said: “Our long-term funding settlement means local authorities will have nearly £200bn to spend over the course of this parliament. This should allow them to deliver high-quality services that local people want, while keeping council tax bills down.
“We’ve also just announced an extra £900m for social care, meaning they will have a total of £7.6bn to spend over four years.”
Surrey county council’s leader, David Hodge, is set to meet Javid to discuss the council’s funding shortfall, particularly for adults with learning disabilities.
Mel Few, a council cabinet member for adult social care, said the council was not yet making plans for a referendum on council tax rises.
“With referendums, people have said if we do not solve the problem we might have to go there, but we are not anywhere near there yet,” he told the Guardian. “Unfortunately, until many people encounter the issues of helping the elderly or people with disabilities, it’s not really on their radar screen.”
Few said although elderly care had been the focus of media attention, the council had “more than 1,000 children in transition to children’s services to adult and as a consequence that is a huge bill going forward. That is what keeps me awake at night.” The council’s finances were on “a cliff edge”, he added, “because even with the 3% rise, we don’t see our way clear at this stage”.
In a statement, the council said its focus was “convincing ministers of the need to adequately fund essential services”, rather than considering further increases in council tax.
“We have been talking to ministers about the unfairness being meted out to the residents of Surrey, when our funding for learning disability has been cut severely even though demand is going up, when funding for adult social care is failing to keep pace with rising demand and when our funding gap for special educational needs continuous to rise,” the statement said.
Surrey MPs include the chancellor, Philip Hammond, the health secretary, Jeremy Hunt, and the transport secretary, Chris Grayling.
One referendum on council tax rises has been held since 2012 and was roundly defeated, with 69% of residents voting against proposals by Bedfordshire’s police and crime commissioner to raise council tax by 15.8% in 2015.
The referendum on the proposal, which would have equated to an extra £24.80 on a Band D council tax bill in Bedfordshire, is estimated to have cost £600,000.
Liverpool’s mayor, Joe Anderson, ruled out such a referendum after the council floated it earlier this year. The council had used an online budget simulator for local residents to suggest ways books could be balanced, which Anderson said had been completed by only 16% of the 10,000 people who attempted it. The simulator also asked users if they would support an increase in council tax of 6%, ringfenced for social care, with 57% rejecting the idea.
“I understand the reasons why the people who said no did; they themselves are struggling, as are many others living in our city,” Anderson said. “I will therefore not be proposing to hold a referendum on any additional increase beyond the 4.99% limit set by government.”
He said in his new year message on Thursday: “The reality is, we are facing the toughest financial challenges we have ever faced in our history.
“We have had more than half of our funding snatched away from us, a 58% cut so far, with more to come. I know people are struggling, including children living in poverty and in some cases going hungry.”
