Rural, Tory-voting communities will face the maximum council tax hike of 5 per cent every year until 2029 as a result of government funding changes, it has been claimed.
In June, Labour revealed details of their plan for a new formula to determine how central government cash is allocated to local authorities, with Deputy Prime Minister Angela Rayner saying it would fix a system that is currently “unfair”.
According to the County Councils Network (CCN), which represents 37 authorities serving around half of England’s population, the new formula favours larger, urban areas such as Greater Manchester, Liverpool and Birmingham which will see their government grant funding increase by £1.2bn over the next three years.
But rural areas such as North Yorkshire, Buckinghamshire and Surrey will be reliant on increasing council tax by 5 per cent, the research shows.
This is the maximum increase councils are allowed to impose by law, although six councils were allowed to hike them by up to 10 per cent this year due to their perilous financial position.
Sixteen authorities will need to rely on 5 per cent increases, the CCN says, including: Central Bedfordshire, Cumberland, Devon, East Riding of Yorkshire, East Sussex, Hampshire, Herefordshire, Hertfordshire, Oxfordshire, Shropshire, West Northamptonshire, West Sussex and Wiltshire.
Only one of the councils is currently under Labour control, with most run by either Conservatives or Liberal Democrats.
It comes amid reports Chancellor Rachel Reeves is considering abolishing council tax entirely and replace it with a “proportional” property tax.
Steven Broadbent, Conservative leader of Buckinghamshire Council said his local residents will be “appalled” at the prospect of 5 per cent tax rises.
“It’s just not sustainable, it’s not fair,” he said, adding that he fears the Government has “cynically” targeted local authorities more likely to be run by other parties for funding cuts.
“Those controlled by Labour are not being hit by the same pressures, generally speaking,” he added. “Whether it was politically motivated or not, it will push more and more councils towards the cliff edge of a section 114 notice [of effective bankruptcy].”
He added: “Our biggest challenge at election time was telling people that 71 per cent of their council tax goes on the statutory services, things like adult social care, which is only really used by a single digit percentage of the population.
“For more than 90 per cent of people, they are saying ‘we pay lots of money and what do we get?'”
Tim Oliver, chairman of the County Councils Network, said reforms to council funding is are “long overdue” and that some elements of the government’s new formula are welcome.
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“However, some 16 county and rural councils across the length and breadth of the country will see reductions in grant funding, while the governments proposals place a disproportionate burden on council taxpayers in county areas to fund local services and redistribute funding to urban areas,” he added.
“Those facing cuts in government funding will inevitably have to reduce vital frontline services, while the reliance on council tax rises leaves even those with modest funding increases facing an extremely challenging funding outlook.
“There is still time for government to rethink this and reduce the pressure on county taxpayers. It is simply unrealistic to expect some of England’s largest social care authorities to provide life critical services while receiving deep cuts in government grant over the next three years.
“It is therefore vital the government makes more money available to further mitigate the impact of these reforms.”
A spokesperson for the Ministry of Housing, Communities and Local Government said: “We do not recognise this analysis. The current, outdated way in which local authorities are funded has left communities behind and damaged local services.
“This must change and is why we are taking decisive action as part of our Plan for Change to reform the funding system so we can improve public services, while maintaining the previous government’s referendum threshold on council tax rises so taxpayers have the final say and are protected from excessive increases.”
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