07/02/2018 15:16 GMT | Updated 08/02/2018 08:39 GMT

Council Tax Rises Planned For 2018 As 80% Of Town Halls Eye Funding Meltdown

'Councils are on the edge.'

Lord Porter
Lord Porter, chairman of the LGA, said council chiefs have repeatedly sounded the alarm on funding 

The vast majority of town halls will put up council tax and hike charges as 80% fear for their financial survival, according to a new survey. 

An astounding 95% of English authority bosses plan a council tax hike while 93% said they will increase charges to make ends meet, the LGiU think tank discovered. 

The greatest immediate pressure on budgets came in children’s services (32% of councils) followed by adult social care (28%), and housing and homelessness (19%), the report found.

Adult social care was the greatest long-term pressure (38%), the survey said.

Lord Porter, Local Government Association Chairman, said councils had been warning a “cliff-edge” was looming for council at the end of the decade. 

“Some councils continue to be pushed perilously close to the financial edge,”  Porter said. “Many will have to make tough decisions about which services have to be scaled back or stopped altogether to plug funding gaps.

“Extra council tax raising powers will helpfully give some councils the option to raise some extra income but will not bring in enough to completely ease the financial pressure they face. This means many councils face having to ask residents to pay more council tax while offering fewer services as a result.” 

Funding pressures

It came as Labour announced the party will help councils bring services back in house, set up new energy companies and develop local economies using a team of experts.

Speaking in Preston Thursday, Shadow Chancellor John McDonnell will unveil the new ‘Community Wealth Building Unit’. 

Preston City Council is reported to have returned almost £200m to the local economy and supported more than 1,600 jobs by using the town’s anchor institutions and council contracts to and develop cooperatives.

“Tory austerity has blighted our communities and forced councils to cut and privatise many public services that we all rely on,” he will say. 

“The next Labour government will end austerity and properly fund local authorities, instead of cutting back and passing the buck like the Conservatives are doing. But we cannot afford to wait until we are in power nationally.” 

Tory peer Lord Porter said local authorities face a funding gap of more than £5bn by 2020, but children’s services was the area most in need of urgent attention.

He said: “The LGA has warned about the urgent need to address the £2bn funding gap facing children’s services.

“A child is being referred to council children’s services every 49 seconds on a daily basis and councils started more than 500 child protection investigations every day last year - up from 200 a decade ago.

“This unprecedented surge in demand shows no sign of abating.”

Council tax can be hiked by up to 3% this year, in line with inflation, before a referendum is triggered, while authorities can also levy an additional “precept” to raise money for spending on social care.

The majority of the councils who responded to the survey (59%) were Tory-run authorities. 

PA Archive/PA Images
Labour's Andrew Gwynne says there is a cross-party consensus for reform of local government funding

Jonathan Carr-West, chief executive of LGiU, said: “Councils are on the edge. They are for the most part holding services together (though a significant minority are not). But they can only do this this by raising council tax, increasing charging and draining their reserves.

“The system is unsustainable and needs far more fundamental reform than is presently on offer. It’s simply not acceptable that we don’t know how local government will work post 2020.

“Councils are calling for assurances around funding for the next three years and for a fundamental redesign of the finance system. At present government is offering neither. That has to change.”

Andrew Gwynne, Labour’s Shadow Communities Secretary, added: “These findings show that after almost eight years of cuts, councils are facing unprecedented pressures to balance their books.

“When faced with choices; of where to cut, and where to invest - the government has failed to show that they understood the real life, human challenges facing this country. 

“There’s now a widespread consensus, across the political divide, that how we fund local public services desperately needs reform, but the Government does not appear to be listening to the sector.”

PA Wire/PA Images
Communities Secretary Sajid Javid

A Government spokesman, said: “Our finance settlement strikes a balance between relieving growing pressure on local government whilst ensuring that hard-pressed taxpayers do not face excessive bills.

“We have listened to representations made from councils and delivered on these with extra funding. Overall councils will see a real term increase in resources over the next two years, more freedom and fairness and with a greater certainty to plan and secure value for money.

“We are also delivering on our commitment to give councils more control over the business rates they raise locally – with millions of pounds staying in communities and being spent on local priorities.  

“We want to work with local government to develop a new funding system for the future and encourage councils to submit responses to the review currently underway.”

 A total of 113 individual councils responded to the survey, representing a third of all English local authorities.