LGA responds to CIPFA council tax research

This increase will cost councils an extra £220 million this year - this is to cover increased contract costs to home care and residential care providers.


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Responding to research by CIPFA into council tax increases this year, Cllr Richard Watts, Chair of the Local Government Association’s Resources Board, said:

“Faced with ongoing funding pressures such as homelessness and looking after vulnerable children, councils continue to be left with little choice but to ask residents to pay more to help them try and protect their local services.

“This will help offset some of the financial pressures they face this year, but more than a third of the extra council tax income for adult social care services will be needed to meet the cost of paying for the Government’s unforeseen increase in the National Living Wage this year.

“Councils in England face an overall funding gap of almost £6.5 billion by 2025 just to cover basic inflationary and demographic pressures. Council tax income cannot be expected to plug the growing funding gaps they face.

“The Budget and the Spending Review need to provide a sustainable, long-term funding settlement for councils which means they can improve services and not just keep them going.”

Notes to editors

  • The Government announced on 31 December 2019 that the National Living Wage for over 25-year-olds is to increase from £8.21 to £8.72 on 1 April 2020 - a 6.2 per cent rise from the current level.
  • This increase will cost councils an extra £220 million this year - this is to cover increased contract costs to home care and residential care providers.
  • If every social care authority uses the 2 per cent council tax social care precept this year they will raise around £570 million for social care services. This means over a third of this extra council tax income would be at risk of being swallowed up by covering the cost of this NLW increase rather than improving social care services.
  • Councils support the NLW but residents should not be left to pick up the bill for new national policies. We are calling on the Government to provide additional funding to councils to meet this additional cost.