Local authorities are urging the Government to lift the cap on council tax bills in a bid to close a looming funding gap that will leave them billions of pounds short to provide affordable homes, school places and social care.
The Local Government Association (LGA) called for the change as it revealed local councils are facing a £5.8bn funding gap by the end of the decade as a result of a 75 per cent drop in core central government funding between 2015 and 2020.
Almost half of councils in England – 168 local authorities – will receive no core central government funding by 2019/20.
LGA chairman Lord Porter is expected to use the annual conference to demand that government ministers act to fill the funding void by allowing councils to raise council tax. Under laws introduced by the Coalition government in 2011, councils currently have to hold a local referendum if they want to increase council tax by more than 2 per cent. The LGA also wants councils to be able to keep all of the £26bn they collect each year in business rates – a proposal that was included in the Local Government Finance Bill that was close to being passed in the last parliament but was thrown out when the general election was called.
A survey conducted by the Local Government Information Unit (LGIU) think-tank earlier this year found three-quarters of councils had little or no confidence in the sustainability of local government finances, while more than one in ten said they were in danger of having to breach laws on the core services councils must provide. 40 per cent of all councils said they were having to make “cuts in frontline services, which will be evident to the public.”
