LGA media release 24 February 2010
Council tax is set to be cut in real-terms in April, according to initial analysis of draft budgets published today by the Local Government Association (LGA).
Householders are set to see an average rise of 1.6% – the lowest increase since council tax began in 1993. With the Retail Price Index (RPI) currently running at 3.7%, the increase would represent a real-terms cut of 2.1%. For councils outside London, the average increase is 1.9%.
The increase means that the average council tax bill per household will be £1,194 in 2010/11 – a rise of just 36p a week on 2009/10.
The LGA survey of more than 100 councils’ draft budgets shows that despite a huge drop in income and a steep rise in the number of people and businesses turning to councils for help and support during the economic downturn, town halls have been working hard to keep tax increases down.
The anticipated real-terms cut comes as councils deal with a sharp fall in income and an increase in demand for services as a result of the worst recession since the 1930s.
Councils have been hit by a £4bn deficit in income over the past two years, the equivalent of losing almost £11m every day compared with 2007/08.
Sales of land, council buildings and other capital projects have fallen by £2.7bn, interest earned on councils’ cash deposits has fallen by £1.3bn due to low interest rates and income is also down from planning applications, car parking and leisure services.
Vice chairman of the Local Government Association, Sir Jeremy Beecham, said:
“Everyone is facing a squeeze on their finances in the current economic climate and no one likes paying council tax. That is why councils have been doing all they can to keep council tax rises to a minimum.
“Councils have had to take tough decisions to carefully balance the need to protect essential frontline services while providing value for money for the taxpayer.
“Local authorities understand that money is tight for everyone and deserve credit for keeping council tax rises lower than ever before. Many councils have indicated that they will freeze or even cut council tax meaning more money in the pockets of residents. Others are having to deal with a unique set of circumstances and face acute pressures on their finances.
“It comes at a time when more and more people are turning to councils for help during difficult economic times. From debt advice to help for the homeless, councils have seen a huge rise in demand for services over the past year. Meanwhile, the money they earn from the services they provide is falling.
“The fact that councils have managed to keep council tax rises to an all time low is further evidence that the government’s capping powers are unnecessary and irrelevant to the needs of local people.”
Council leaders are urging people struggling to pay council tax bills to contact their town hall to make sure they get any council tax reductions they are entitled to. A total of £1.8bn of council tax benefit goes unclaimed every year.
Author: LGA Media Team
Contact: LGA media Office, Tel: 020 7664 3333
Notes to editors:
1. The council tax survey is of 105 local councils, police and fire authorities in England. RPI inflation published last week by the Office of National Statistics was 3.7% and the consumer price index was 3.5%.
2. Details of previous annual council tax surveys below:
2006: LGA prediction – 4% Actual rise – 4.5%
2007: LGA prediction – 4.4% Actual rise – 4.2%
2008: LGA prediction – 4% Actual rise – 3.9%
2009: LGA prediction – 3.5% Actual rise – 3%
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