A new report has found that most English councils are planning to implement maximum tax hikes and cut services in a bid to avoid bankruptcy. Nine in ten local authorities will increase council
tax or raise charges for waste or parking, with the majority of councils surveyed planning to cut spending on services. A total of one in 12 councils said that they could go bankrupt due to financial difficulties. The report by the Local Government Information Unit shows that families struggling with the cost of living will bear the brunt of these measures.
Most councils plan to increase council tax by the largest possible amount without a referendum, which is between 2.5% and 3%. Almost every council providing social care will also demand an additional 2% increase from April. As a result, households living in an average Band D home could face a hike of £98 from April to £2,064.
Jonathan Carr-West, Chief Executive of LGIU, said that councils’ confidence in their finances was at an all-time low and that councils were being let down by a funding system that was not fit for purpose. Council budgets were one of the major losers during the austerity years as NHS and school budgets were protected. However, 2023 is proving to be an unusually difficult year due to rampant inflation and the cost of living pressures on residents.
Despite this, a fifth of local authorities said that a lack of cash would lead to cuts in frontline services that would be evident to the public. Croydon, Slough, and Thurrock councils have all declared effective bankruptcy in the last three years, and a fourth council, Woking, has warned that it could be worse than bankrupt due to borrowing.
Councils have been criticized for using public money to invest in commercial deals, many of which have gone sour. However, they claim that they have no choice if they are to keep services running. Just over half of councils, 52%, said that they would be increasing commercial activity this year, primarily through local developments and asset sales. Photo by Nilfanion, Wikimedia commons.