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Council tax billpayers should brace for 5% hike

Paloma Kubiak
Written By:
Paloma Kubiak

Council tax bills could be hiked by 5% next year, details buried in the accompanying Spending Review documents reveal.

As part of the chancellor’s Spending Review, accompanying documents revealed that social care authorities will be able to charge an adult social care precept of up to 3%.

This is on top of the referendum threshold for increases in council tax which remain at 2% in 2021/22.

The document states: “The government will enable local authorities to access over £1bn of spending for social care through a £300m social care grant and the ability to levy a 3% adult social care precept.

“This funding is additional to the £1bn social care grant announced last year which is being maintained. The government expects to provide local authorities with over £3bn to address Covid-19 pressures, including in adult social care. This will support councils to maintain care services while keeping up with rising demand and recovering from the impact of Covid-19.”

It added: “The referendum threshold for increases in council tax will remain at 2% in 2021/22. The Ministry of Housing, Communities and Local Government (MHCLG) will set out full details of the council tax referendum principles and adult social care precept flexibility as part of the consultation on the detailed methodology for the Local Government Finance Settlement for 2021/22.”

‘Massive bombsell’

Shadow exchequer secretary to the treasury, Abena Oppong-Asare MP, said the detail of the 5% council tax hike was “buried deep in the documents”.

“That is going to be a massive bombshell to so many people across the country,” she said.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The crisis has shone a spotlight on the need for better social care with so many people isolated at home. So council taxes will rise to meet these costs.”

‘Additional funding for adult social care welcome’

Will Hale, CEO at Key, said: “While additional funding for adult social care such as that which has just been announced in the government Spending Review is always welcome, it is worth bearing in mind certain realities. Adult social care is a fairly broad term that covers providing support for those who are over 18 years old and may have physical or learning disabilities, or physical or mental illnesses.  Many of these are potentially exacerbated by the current crisis so how much of this funding will be used to support over-55s is debatable.

“That said, we know that councils are working hard to support local older residents who need care but they are facing tough financial challenges and may need to make difficult choices. One of these choices is likely to be about exercising their ability to charge a 3% social care precept on top of council tax bills. Councils have had the power since 2015 to increase council tax to pay for social care and this is likely to mean council tax rises from next year which won’t be welcomed by council tax payers.

“While these increases are likely to support the most vulnerable, many over-55s are waking up to the reality that not only are they likely to need to pay for care at some point in their lives but the need to make active choices around what type of care they want to receive. With the pandemic’s impact on care homes well publicised, more people than ever before are likely to want to receive support in the safety and familiarity of their own home.”