Council tax could rise by up to 5% next April as ministers give green light for hikes

COUNCILS will have permission to raise taxes by up to five per cent next year, it was confirmed today.

Buried in the small print of the Chancellor’s spending review was an announcement that the Treasury have given the green light for local authorities to up taxes if they want to.

And with the coronavirus crisis having ravaged their spending, it’s likely that many will choose to hike bills for their areas.

The Treasury has allowed councils to set their own budgets – up to a set amount – since the rules were changed in 2015.

They will be allowed to hike bills by 2 per cent without holding a referendum for local people.

If they want to go above that, they will need to hold a vote.

And councils will also be able to charge an extra three per cent more to pay for social care in their area too.

The small print spending plans state that the spending review “supports local authorities through increasing core spending power by an estimated 4.5 per cent in cash terms next year, which follows the largest real terms increase in core spending power for a decade at Spending Review 2019”.

It went on: “Local authorities will be able to increase their council tax bills by 2 per cent without needing to hold a referendum, and social care authorities will be able to charge an additional 3 per cent precept to help fund pressures in social care. 

“SR20 also provides £254 million of additional funding to help end rough sleeping – a 60 per cent cash increase compared to SR19.”

But Labour MPs accused the Chancellor of trying to get cash-strapped councils to pay for even more services.

Barbara Keeley said: “As ever this Government is switching responsibility at funding #SocialCare to local councils.

“And no plans for the desperately-needed funding for reform.”

The Chancellor began his statement with a stark warning about the state of the UK’s finances, and warned that the economy would be “around 3% smaller” in 2025 than previously predicted.

Revealing the scale of the problems the nation faced, he warned: “Our health emergency is not yet over. And our economic emergency has only just begun.”

He revealed a pay boost for NHS staff, a hike to the National Living Wage and a new levelling up fund for help MPs in left-behind areas.

And despite opposition from former PMs he pushed ahead with plans to cut foreign aid to try and paid back some of the debts.

But millions of public sector workers face a pay freeze to help pay back the Covid debts, and overall spending is set to be slashed.

It came as anger grew over the threat of towns and cities being plunged into Tier 3 tomorrow – sparking more economic chaos as businesses are ordered to shut.

In a gloomy statement he told MPs and the nation:

• The Government is on track to dish out a huge £280bn to get our country through coronavirus this year alone – and £18billion is planned for next year
• The nation’s debt is forecast to continue rising in every year, reaching 97.5 per cent of GDP in 2025-26
• The economy will shrink by 11 per cent this year – the largest fall for more than 300 years
• Unemployment will rise to a peak of 7.4 per cent – 2.6million people – by the second quarter next year
• NHS staff to get pay RISE but millions of public sector workers face pay freeze
• 2million will get a National living wage hike to £8.91 an hour
• Foreign aid will be cut to 0.5 per cent of GDP next year – but he hopes to raise it back again afterwards
• A £4billion ‘levelling up’ fund to help areas in the North hit hardest by the pandemic
• Day to day public spending is up overall in real terms by 3.8 per cent, or £14bn more
• Manifesto promises kept on schools, hospitals and police funding