Government looks set to pass on a Tax bombshell to Council tax payers
York’s Liberal Democrat councillors have warned of an unfair ‘tax bombshell’ that could be passed to local communities, as Government Treasury is contemplating scrap the current "referendum cap" that limits rise in council tax to 2.99%.
Ahead of the fiscal announcement on the 17th November, it is being reported that the Chancellor is considering passing on a significant council tax increase to local communities. Councillors have hit out at the use of the regressive and outdated the council tax system, particularly at this time of the cost of living crisis, and how it will not fix the financial issues facing councils.
Consecutive years of significant decline in funding from central government has seen settlement funding for City of York Council decline by 50.9% since 2015/16 (from £53mil to £26mil in real terms). This is now compounded by the challenges brought about by the pandemic, energy costs and rising inflation, leaving City of York Council facing a significant budget gap of £15million next year. Despite many reassurances and pledges, the Government has failed to live up to its promise of supporting local councils and fixing the social care crisis, which continues to put increasing unsustainable pressure on Council’s finances.
The Local Government Association has recently outlined the extent of the financial crisis facing councils across the country, warning that Councils face a £3.4billion funding gap next year “just to keep services at pre-covid levels”. According to the LGA, council tax would have to be raised by “well over 10%” for the current black hole to be filled by tax hikes alone.
York’s Liberal Democrats are calling on York Outer MP Julian Sturdy to put pressure on his Government and not let local communities bear the price of the Government’s failure to fix the adult social care crisis and support local services. By continuing to prop up Conservative plans that will see local residents pay an unfair and regressive tax, the MP is passing on the buck and ignoring the hardships faced by resident and local businesses.
Councillor Keith Aspden, Liberal Democrat Council Leader, commented:
“Instead of supporting local services, from social care for the most vulnerable to frontline teams, this Government is considering dropping a ‘tax bombshell’ on local communities, asking councils to pick up the tab for the sharply increasing cost and demand for core services in the community.
“As seen nationally, the financial sustainability of councils is on a cliff-edge, and the scale of the pressures cannot be met by reducing costs, making efficiencies or raising council tax. The prospect of having to make severe cutbacks to local services would not only damage our communities but would also massively undermine the Government’s stated ambitions to level up the country and help residents through the cost of living crisis.
“The answer to these challenges is not for local communities to foot the bill through regressive and unfair tax. To save the local services we all rely on, councils, such as York, need adequate funding. The funding needs to be in line with inflation, the demand for services and with a long term fix to the broken social care model.”