Jeremy Hunt
(Picture: Getty Images)London local authorities have warned a 5% hike in council tax will “barely touch the sides” of the capital’s funding shortfall.
Boroughs have a £700million financial blackhole to plug as the cost of living continues to sky-rocket, according to analysis by London Councils.
The umbrella group said council finances remain in “critical condition” at a time when they will be “even more reluctant than usual to raise tax” because of soaring budget pressures on families.
In his autumn statement, Chancellor Jeremy Hunt gave town halls the flexibility to increase the general tax by 3%, plus another 2% to pay for adult social care from April.
The £700m estimated shortfall already factored in an anticipated small increase in council tax revenue in London and a 5% rise would only close the gap by £80m – leaving around £620m of funding to be found.
Georgia Gould, Chair of London Councils, said: “Borough finances remain in a critical condition.
“Before today’s statement from the chancellor we estimated a £700m shortfall next year for councils in the capital, which means a bleak future for many of the local services our communities rely on.
“Council tax is not the answer to the inadequate funding we’re grappling with. Council tax rises during a cost-of-living crisis are extremely difficult for the struggling households we’re determined to support. But even if council tax goes up, it could never plug that £700m funding gap.
“Boroughs need proper investment from the government. Just as ministers worked in partnership with councils during the Covid-19 pandemic, we now require similar support in the face of the current economic emergency.”
Adam Hug, leader of Westminster City Council added: “By paving the way for higher council tax, the Chancellor is sending local authorities down a dead end which will spell destitution for some while hardship just got harder for local people.”
If London boroughs choose to impliment the maximum rise it would push thousands more Londoners into paying average bills of over £2,000.
Mr Hunt said council tax flexibilities, alongside other reforms, would allow an increase in funding for the social care sector of up to £2.8billion next year and £4.7billion the year after.
He told the Commons: “How we look after our most vulnerable citizens is not just a practical issue but speaks to our values as a society. So today’s increase in funding will allow the social care system to help deliver an estimated 200,000 more care packages over the next two years - the biggest increase under any government of any colour in history.”
