Warning over new council tax plans for the UK
New analysis by the County Councils Network (CCN) shows that almost all the increase in funding for council services in county and rural areas over the next three years will be reliant on residents paying maximum council tax rises for the foreseeable future, under plans to reform the local government finance system.
The CCN, which represents the largest authorities in England, says the government’s fair funding reforms are ‘better than feared’ for councils in county and large rural areas.
However, they are warning that council taxpayers in these areas are ‘shouldering the burden’ of redistributing hundreds of millions of pounds to urban areas, with some councils facing ‘deep cuts’ to services.
In June, the government revealed its detailed plans for redistributing council funding over the next three years through its ‘Fair Funding Review 2.0’ consultation. This included a set of new formulae to determine different councils’ funding needs and how much councils can raise in council tax.
These permanent funding changes will be phased over three years, with ministers also expecting councils to raise council tax by 5% in each of the next three years to fund services through their ‘Core Spending Power’ (CSP) and support the transition of funding allocations.
As a result of the proposed changes and the funding announced at the Spending Review, councils in county and rural areas could be expected to meet yearly increases in the demand and costs of services through local taxation, the CCN said.
“Reforms to the way council funding is distributed are long overdue, and we welcome the government’s proposals for new formulae for distributing funding for adult social care and home-to-school transport,” said Cllr Tim Oliver (Chairman of the County Councils Network).
Alongside an adjustment for the costs of delivering services in rural areas, this means the funding reforms are better than many of our councils feared, with some seeing a welcome uplift in funding, he said.
“However, some 16 county and rural councils across the length and breadth of the country will see reductions in grant funding, while the government’s proposals place a disproportionate burden on council taxpayers in county areas to fund local services and redistribute funding to urban areas.
“Those facing cuts in government funding will inevitably have to reduce vital frontline services, while the reliance on council tax rises leaves even those with modest funding increases facing an extremely challenging funding outlook.”
