GB News: Expert discusses potential rise in Council Tax
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The Institute for Fiscal Studies (IFS) today published its latest forecast for the Government’s spending plans. The analysis – which was pre-released as part of a larger report – said that annual council tax increases of 3.6 percent will be needed for the next three years. The IFS said the hike would be required to offer the same range and quality of services for the three years as before the COVID-19 crisis.
Researchers said this would raise average households’ average annual bills by £160 by 2024−25, or £77 after inflation.
However, the IFS warned that extra cost pressures and demands could see bills rising even further by up to 5 percent through to 2024–25.
The Government gave English local authorities the green light to bring in council tax rises of up to 5 percent in December.
Under the plans councils can add 2 percent to bills, and another 3 percent if they provide adult social care.
These increases were allowed from April, the start of the 2021/22 financial year.
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The Secretary of State for Housing, Communities and Local Government Robert Jenrick defended the plans as he unveiled them in Parliament in December.
Speaking in the House of Commons, he said: “Local councils are not under any obligation to increase council taxes.”
The Conservative minister faced criticism from Labour’s Shadow Housing Secretary Steve Reed.
He said it was “shocking” that the Government had approved the rise “while the country still faces an unprecedented health crisis and the deepest recession for 300 years”.
He claimed the Government had “decided to clobber hard-working families” under “extreme pressure”, while alleging its spending plans were not value-for-money.
Mr Jenrick hit back at the criticism, arguing that the Government’s schemes are “extremely generous”.
He said the local authority funding provided “75p in the pound of losses for local councils to ensure that they can weather the particular storm that they have been through this year.”
He added: “We only have to look back at the record of the last Labour Government to see what happens under Labour.
“Under Labour, council tax doubled. Under this Conservative Government, council tax is lower in real terms today than it was in 2010-11.”
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Mr Jenrick also committed the Government to spending an extra £2.2 billion on “critical public services” like adult and children’s social care.
He said local authorities in England would see an average 4.5 percent cash-terms increase in their core spending power, which he said was also an increase in real terms.
One of the authors of the IFS’ forecast today, research economist Kate Ogden, warned that the Government would likely have to find billions of pounds more over the next couple of years to plug the funding gaps in local authorities.
She said: “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.”
The IFS was sceptical of the Government’s spending plans for social care, which it said were “underfunded”.
It said: “These are likely to cost £5 billion a year in the longer term, almost three times the additional annual funding currently allocated over the next three years.”
Mark Franks, from the Nuffield Foundation, which funded today’s analysis, said the Government’s social care plan was “not sufficient” to meet future demand for local service provision or address staffing issues.
He added: “Currently, many existing adult social care workers only receive minimum wage and zero-hours contracts are common, which has contributed to staff shortages in the sector.”
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