Council Tax Hikes Explained: Why Your Bill Increases Every Year

Many local councils are raising taxes. The increase is around 4.99 percent, which will likely upset many people. Councils in Greater Manchester plan similar hikes. This extra money helps balance their budgets. Balancing budgets is a legal requirement.

Why do these taxes go up each year? It relates to government funding levels. The government assumes councils raise taxes at the maximum amount, typically 4.99 percent. If councils don’t raise taxes, they lose money and miss the chance to increase funds. Some councils use reserves instead; Rochdale did this for the last three years.

Councils risk bankruptcy without balanced budgets. Tax increases mainly cover adult social care and fund vital services. Waste collection, libraries, parks, and children’s services require money. Councils struggle to find income.

They mainly get money from council tax and rely on sales and fees. Investment income is another source. Some councils invest in businesses, hoping for profits and dividends. All ten councils in Greater Manchester invested in airports.

Council tax weaknesses are becoming apparent. The amount raised varies by region, which doesn’t relate to needs. Tax is based on old property values, and some view it as unfair.

Areas with high-value homes raise more than Greater Manchester, for example. The Local Government Association notes problems: funding pressures strain councils, and the current system is outdated. They say it needs major changes.

Louise Gittins chairs the Local Government Association. She stated councils are key to public sector reform and help promote local growth. Gittins recognizes financial challenges for the government. Funding councils would unlock potential.

She says substantial savings were made recently, and innovation continues for best value. Without adequate investment, vital services suffer, and government ambitions could be hindered.

Last year, the government announced £69 billion for councils, boosting spending power across England. £3.7bn of this went to social care authorities, helping communities and children.

Deputy Prime Minister Angela Rayner discussed this also. Local leaders ensure change happens and work hard for communities. The government wants a fairer funding system, so postcode lotteries should end eventually. Everyone deserves proper support.