It is predicted that council tax will rise by 3% in England this year – higher than inflation rises, but also lower than any rise in the last ten years.

However, ministers are saying that the rise is excessive, and that costs could be cut elsewhere in order to protect core services.

Councils predict that their overall incomes will fall by £2.5 billion caused by lower income from investments, services and selling land during the falling house prices.

Official Consumer Price Indexes have measured that inflation currently stands at 3%, but is expected to fall. The Retail Price Index, another method of measuring inflation, has already fallen 0.1%.

Local authorities across the country are having to revise their budgets in order to reduce interest on investments, lowering income they expected t o receive from things like car parking and leisure centres. On top of this, demand for housing benefits is rising, putting more pressure on council finances.

If council tax does rise by 3%, it is expected that the average annual bill for this financial year rising to £1,414.

‘No excuse’

Margaret Eaton, chairman of the LGA has said: “Councils are responding to the fact that people are feeling the pinch and are revising down this year’s council tax rises.

“Councils understand people are suffering and they are working flat out to keep council tax down, to keep local businesses afloat and help people deal with the impact of the recession.”

John Healey, a Local Government Minister, also had this to say about the budgetary stability to plan ahead: “Next year, they will receive a 4.2% increase in grants, with more funding strings removed so that money can be used as they see fit to meet local needs and priorities.

“So there is no excuse for excessive council tax rises or service cuts, and I have made clear that we will take capping action where necessary to protect council taxpayers.”

On top of the council tax rise, state pension is also set to increase from next April, but Age Concern’s Gordon Lishman has said pensioners will still struggle because council tax worked out based on their homes, not their income.

He said: “Although this year’s state pension uprating might seem generous, many older people are still dealing with the fall-out of last year’s inflation rise and will be struggling to make ends meet.”

Call for Tax Freeze

The Conservative party are claiming that they would give consumers a two-year freeze on council tax by cutting spending on government consultants and advertising. 

Caroline Spelman, shadow local government secretary has agreed with this, saying taxpayers were “already feeling the pain of council tax having doubled under Labour.

“Now council tax bills are to rise by a further £41 this April, at a time when people are losing their jobs or being hit with pay freezes.

“By contrast, residents in Scotland will benefit from another council tax freeze this year.”

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