Research from the County Councils Network (CCN) has found that 84 councils out of 114 who have published their 2023/34 budget proposals so far plan to raise council tax by the maximum permitted which is 4.99%. These are upper-tier councils with social care responsibilities.
With inflation running at 10.5%, local authorities face multi-million funding gaps which have built up and which they need to close to balance their budgets for 2023/24. Council leaders say they recognise the cost of living pressures for residents, but have reluctantly put forward maximum rises because they have ‘little choice’ in order to set a balanced budget and to fund local services which will be vital for struggling households.
The changes will come in for residents in April at the start of the new financial year. Councils are able to levy a maximum of 4.99% should they chose to do so – a total of 2.99% for general council tax and a further 1.99% for the adult social care precept, which is ringfenced for care services. Government funding levels for 2023/24, particularly for care services, are predicated on councils taking the maximum council tax rise.
Watch CCN interviewed on BBC News and ITV News as part of coverage of the research below.
In total, 114 councils out of 152 have published their budget proposals for 2023/24. CCN data shows that:
Despite the government providing extra funding for councils in October’s Autumn Statement, which was welcomed by CCN, significant funding pressures, fuelled by inflation, still remain. Inflation is projected to add £1.5bn to the budgets of 40 county and rural councils in 2023/24.
Those county local authorities face some of the largest funding deficits in the country as a result of inflation and demand pressures.
Even accounting for a 4.99% council tax rise, Hampshire County Council (which gets 89% of its revenue from local tax) faces a £57.7m funding deficit in 2023/24 which the authority says will have to be filled by reserves.
Durham Council faces a £10.2m deficit even after proposing £12.4m in savings and a 4.99% council tax rise. Cheshire East Council faces a deficit of £25.4m which will be filled through savings and council tax rises.
Local authorities say that tax rises not only allow them to protect local services but invest in them too. Measures put forward by CCN’s member councils include increasing payments to adult social care providers to mitigate rising costs and for wage increases for carers, investment to create thousands of extra school places, providing more funding for vulnerable children in care, and investment in climate action.
Council tax also funds vital support for low-income individuals and households struggling with the cost-of-living crisis. Measures include council tax reduction schemes, the Household Support Grant which provides fuel and food vouchers, and investment into local charities and voluntary organisations.
Cllr Sam Corcoran, Labour Vice-Chairman of the County Councils Network and Leader of Cheshire East Council, said:
“With inflation reaching levels not seen for over 40 years and with demand-led pressures for care services showing no sign of abating, local authority leaders are setting their budgets in the most difficult circumstances in decades.
“We all recognise the cost-of-living crisis is impacting on every household in the country and disproportionally on low incomes, but we have little choice but to propose council tax rises again next year, with many local authorities reluctantly opting for maximum rises.
“With councils facing multi-million funding deficits next year, the alternative to council tax rises would be drastic cuts to frontline services at a time when people at the sharp end of the cost-of-living crisis need us to be there for them. With the financial situation for councils looking extremely tough for the next few years, we will be calling on the Chancellor for further help in the March Budget.”