Council tax bills set to rise next year as everyone passes the buck on who funds services

We don’t yet know how much council tax will rise next year. That will be decided in February but we have some early clues. Shropshire Council’s financial plan assumes a rise of 3.99%, though it may be tempted to take advantage of a government offer made just before Christmas to add an extra 1% to the bill.

The Police and Crime Commissioner is proposing an increase of 4%, though the government has since said he would be allowed to raise half as much again. The Fire Service and Ludlow Town Council have yet to declare their plans.

The government is changing the rules on how public services are funded. It wants local authorities to pay more of the bill through council tax and business rates. In turn, county and district councils are passing part of the buck to parish and town councils.

There is a good side to this. We will get greater local control of what we fund and how we will fund it. The significant downside is that local taxes will go up.

If there is an overall 4% rise, the total bill for council tax for a Band D property will go up by £56 to £1,448 a year, nearly £28 a week.

Council tax may rise by more than 4%

Shropshire Council’s costs are going up. Not to pay for a sprawling bureaucracy. Many services have been cut to the bone. The main pressure on the budget is from meeting the accelerating costs of adult social care. The council is also still suffering from poor financial management having not raised its council tax from its creation in 2009 to 2016. This zero tax rise policy was driven by political dogma. It means we must make tougher decisions on tax rises than we might have had if council tax had grown in line with inflation.

Media reports have suggested that council tax in Shropshire will go up 2.7% next year. That’s wrong. This is the increase in the number of properties subject to council tax. We will set the council tax increase early next year.

The current financial plan for the council is based on a 3.99% rise but this was written before the government announced it would allow an extra 1% rise. Shropshire Council is facing a £36 million deficit next year and has been raiding reserves to patch holes in its budget. I wouldn’t be surprised if it goes for the extra 1% increase taking the council tax rise to 4.99% for Shropshire Council alone. (See this article for why the council can splash out a reputed £60 million on buying shopping centres but can’t afford to fund basic services.)

Shropshire Council it is also aiming to raise £1.2 million a year by imposing contributions to council tax on some of the poorest in our county.

The Police and Crime Commissioner is recommending a rise of £7.58 (4%) on the annual bill in 2018/19 for a band D home, bringing the annual policing bill to £197.18. Commissioner John Campion started consulting on this rise before the government announced that commissioners will be allowed to add £12 to their share of council tax for a band D home next year.

Our police are already struggling for resources, especially in rural areas like ours. In his first year as commissioner, John Campion froze the council tax contribution to policing. I have always regarded that refusal to raise funds for the police as a statement of his politics, not a rational assessment of what the police need to support and protect us. Now, if Campion doesn’t take up the offer of a £12 rise, West Mercia Police will have £50 million less next year than they might have had.

Eyes will turn to Ludlow Town Council at the end of January, when it must set its precept (the local council tax). Last year, it went for a precept rise of 24%, taking its share of council tax for a Band D property from £107.60 to £133.30. It argued that it had to take over services from Shropshire Council but has yet to take over any. It said it needed money to appoint a deputy town clerk but has yet to make an appointment. That means that its proposals for any precept rise this year will be looked at with extra scrutiny. The town council has been consulting on its priorities for future spending.

The good news for parish and town councils trying to balance their budgets is that Communities Secretary Sajid Javid has announced that the government will not impose a cap on how much local precepts can rise for at least three years. But the government also says these councils should dip into reserves before raising precepts.