The average Band D council tax bill is set to go beyond £2,000 for the first time ever. Plans that may be unveiled in the Autumn statement may see the major rise as it is understood Chancellor Jeremy Hunt has looked at loosening the requirement for town, county and city halls to hold local referendums before raising the charge.
The Telegraph reported that the government intends to scrap the current "referendum cap", which is a 2.99% rise in council tax, to allow an eye watering 4.99% rise instead. This would mean millions of households in Band D hit by rises of nearly £100 in April 2023.
They are already £1,966 which has gone up more than £500 a year since the Tories took power in 2010. That means they are almost guaranteed to top £2,000 in April.
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Sources in the Treasury do say the measure would allow councils "more flexibility" to increase revenue to pay for rising social care costs. The Local Government Association has previously warned however that authorities would have to raise council tax by “well over 10%” if a current black hole is filled by tax hikes alone.
That would be “neither sustainable nor desirable given the current cost of living crisis”, the body representing 350 councils warned. The move would also break the promise made by the Conservative Party in 2019 which pledged to keep the current rate saying local people would "have the final say” on increases in council tax.
Due to inflation and rising minimum wage, Councils are facing a £2.4bn gap in their budgets this year since they were set in Autumn.
An LGA spokesperson said: “While council tax is an important funding stream, it has never been the solution to the long-term pressures facing councils” insisting that it raises “different amounts in different parts of the country – unrelated to need - and [adds] to the financial pressures facing households.”
Members of the The County Councils Network said they were “grappling with £3.5bn in inflationary and demand costs this year and next” but warned many families “continue to be impacted by the cost-of-living crisis.
“Large-scale council tax rises are not the answer to the scale of the financial challenges councils face, and would be unfair and unacceptable for residents. Therefore, the priority should be for government to allocate more funding for councils in the Autumn Statement.”
Jeremy Hunt has warned "we will be asking everyone for sacrifices" as the nation faces "difficult decisions" with reports suggesting he could cut the £150,000 threshold for 45p tax to £125,000 to generate £1.3billion a year. There's also a suggestion he could cut energy bills support from £60bn in the current six months to just £20bn in the six months afterwards.
He told told Sky’s Sophy Ridge: “We don't want anyone not to be able to afford to heat their home over this winter or indeed future winters. But in the long run, what you need is a plan that means we don't need to have to give very, very expensive support as taxpayers.”
He said Thursday’s Budget statement “will continue to support families” but it will not be “uncapped” or “unlimited”.
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