Rishi Sunak and Boris Johnson sparking ‘double whammy’ with forecasted council tax hike

Boris Johnson has ‘deal’ with Sunak over spending says insider

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A think tank has warned this week that the Prime Minister’s promise to “fix” Britain’s social care sector will require billions of pounds more from his Government and substantial council tax rises. The Institute for Fiscal Studies (IFS) warned that extra cost pressures faced by local authorities could easily push up council tax bills by 5 percent a year – or £220 – by 2024-25. David Phillips, an associate director at the IFS, added that the extra £12billion a year promised by the Government may not be enough. He added: “The recently announced social care reforms pose major challenges for councils across England.

“The funding announced by the Government so far is unlikely to be enough to meet all of its objectives, in either the short or longer term.”

This comes after the Telegraph reported last month that council tax will rise, creating a “double whammy” when combined with the National Insurance hike which was announced in September.

Town halls are likely to require extra funding because cash from the health and social care levy will be primarily diverted to the NHS initially.

Therefore, to meet the shortfall in funding for social care, average council tax rises of at least five or six percent will be levied next year, according to ministers.

One senior minister admitted the prospect of soaring council tax bills was “a worry”.

They told the Telegraph’s Chief Political Correspondent Christopher Hope: “At the end of it all, people are going to ask themselves ‘do they want the Government to level with them and be honest’ or ‘do they want a Government that wrings its hands and does nothing’.”

Another Government source added: “There will be pressure but that is one of a number of factors. Some of the others are looking more positive than councils were telling us six months ago.”

Meanwhile, Clive Betts, Labour chairman of the Housing, Communities and Local Government committee, told the newspaper that he also believes a council tax rise is around the corner.

He said: “Councils tax bills will have to rise because there is no other way for councils to be able to pay for social care. There is no social care plan and no social care money.

“The people who are going to be hit hardest by the council tax increases are the very people hit hardest by National Insurance increases. It is a double whammy in April.”

The National Insurance increase of 1.25 percent was a controversial one, given that the Conservative Party vowed not to raise taxes during the 2019 general election.

Making the announcement, Mr Johnson said: “No Conservative government wants to raise taxes, I will be honest I accept this breaks a manifesto commitment. It is not something I do lightly but a global pandemic wasn’t in anyone’s manifesto.

“This is the right, the reasonable, and the fair approach. I think the people of this country understand that in their bones and they can see the enormous steps that this government and the Treasury have taken.”

Economist at the free-market Institute of Economic Affairs, Julian Jessop, told Express.co.uk last month that there is no guarantee the National Insurance increase will actually solve the health and social care issues.

He said: “It’s a tax increase for a start, you have to question whether you needed to raise taxes in the first place.

“But also, the money doesn’t look like it’s going to be well spent, so it doesn’t even look like it’s going to achieve the aim of improving health and social care.

“I think it’s a missed opportunity to have a fundamental rethink about social care and tax. Instead they have gone for a short term fix that actually may end up fixing nothing at all.

“There’s actually not going to be money for social care for several years, initially the money is going to be used to solve the backlog in the NHS.

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“In the longer run, there’s no actual guarantee that this money will go to social care because, although they say it’s going to be ring-fenced, why would you necessarily believe a Government that’s just broken so many manifesto promises in a single day.”

Chancellor of the Exchequer Mr Sunak is preparing to announce his Autumn Budget at the end of this month, and could announce some big changes.

As The Times reports, economists think Mr Sunak may need more revenue to meet uncosted spending pressures.

These include ongoing test and trace and vaccination programmes, and balancing the public finances after borrowing billions to protect the economy during the pandemic.

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