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Council tax not enough to fix £8bn local services funding hole

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General view of Haringey Council's offices in Wood Green, north London. Picture date: Thursday February 1st, 2018. Photo credit should read: Matt Crossick/ EMPICS Entertainment.
Many councils across the UK will struggle to pay for essential services relying on council tax alone. Photo: Matt Crossick/ EMPICS Entertainment.

Councils in England will face extra cost pressures of at least £8bn ($10.8bn) by 2024 just to keep crucial local services running at today’s levels, the Local Government Association (LGA) said, adding that council tax alone cannot raise this kind of money.

Council Tax is an annual fee charged by local council to provide services like rubbish collection and libraries.

The amount paid by households depends on the valuation band for the property they live in and how much the local council charges for that band.

The LGA, a national membership body for local authorities, has warned that relying on council tax alone will impact services such as care for older and disabled people, child protection, homelessness prevention, waste and recycling, and road maintenance.

And it said the £8bn estimate doesn’t include “the very real pressures that councils are facing” such as paying care workers a fair wage or investing in early intervention services which help families and young people falling into crisis.

The UK government's next budget, along with the conclusions of the 2021 Spending Review, will be held on 27 October.

Read more: Call to scrap council tax in favour of property tax

The LGA’s submission to the Spending Review is calling for councils to be given a multi-year settlement which provides sufficient additional government funding and certainty to meet growing cost pressures.

It would enable councils to plan local services more efficiently and help reduce pressures on the rest of the public sector.

Councils are also calling on the government to use the Spending Review to create an ongoing Community Investment Fund, worth £1bn.

“This un-ringfenced fund could be used by councils to invest in supporting individuals, strengthening communities, and tackling priorities in their local areas, including health inequalities,” the LGA said.

James Jamieson, LGA chairman, said: “If we are to come out of this pandemic with a society that is truly levelled up, the vital services that councils provide must be at the heart of it.”

The LGA said its submission to the government is not just about money, but also sets out how devolving and empowering local government in areas such as education, special educational needs and disabilities can benefit communities.

This comes as think tank IPPR has called the council tax, which has been around for 30 years, “unfair and outdated”. It is urging the government to get rid of it, along with stamp duty, and replace both with a proportional property tax.

Watch: What is universal basic income?

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