The cost of living crisis is beginning to bite.
Energy bills are set to soar, interest rates are on the rise and we’re all paying more for our food.
Our National Insurance Contributions are also going up by 10pc from April.
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So why, at this most difficult of times, are our local authorities putting council tax up?
Is it a case of wasteful councils squeezing their residents for yet more cash or are the reasons more complex?
What does council tax pay for?
Council tax pays for services such as maintaining the roads and collecting our bins as well as things such as parks and libraries - although the majority goes on looking after society’s most vulnerable.
According to the Local Government Association (LGA) steadily growing demand has seen councils with responsibility for children’s and adult’s social care devoting nearly two-thirds of their total spending to these services.
By law, a ‘balanced budget’ - setting out how everything will be paid for - must be set every year.
Councils cannot borrow money to fund any of these services. They must be paid for by revenue - in the form of council tax, business rates, fees and charges and government grants, such as the New Homes Bonus.
Reserves are another option but councils are generally reluctant to dip into these in case unforeseen circumstances arise and they have nothing to fall back on.
And of course, every council has had to make millions in cuts to services over the last decade or more.
For example Rochdale council has made £184.4 million of budget savings between 2009 and 2020.
Who decides how much to put it up by?
The short answer is the council. But it’s not quite that simple.
The government sets a limit by which councils can put up council tax without triggering a local referendum.
These thresholds form part of the Local Government Funding Settlement (LGFS) - which councils had hoped would cover the next three years to give them more certainty and allow them to plough ahead.
However, there is only a one-year settlement for 2022-23, which sets out the following referendum limits ((increases allowed before triggering a local referendum)
- 2pc increase on the general element of council tax.
- 1pc increase on the ringfenced adult social care precept element of council tax.
- Up to 3pc of deferred 2021/22 adult social care precept increase.
Mayoral precepts - such as those set by Andy Burnham for policing and general purposes - are not at the discretion of the council, but come with their own ceilings.
Every borough in Greater Manchester has - or is proposing to - put up council tax by around 3pc (not accounting for mayoral precepts).
It’s an unpopular move with voters, so why do it?
Changes to local government funding since 2010
Central government grants to local councils were cut by 37pc in real-terms between 2009/10 and 2019/20, according to analysis from the Institute for Government.
And councils across Greater Manchester continue to wrestle with multi-million pound budget gaps.
Last July, for example, Rochdale said it was facing a £22m blackhole between 2021 and 2025, while Trafford had to fill a £15m budget gap going into the 2022/23 financial year.
Manchester council announced in November that it was facing a £153m budget shortfall over the coming three years.
Local Government Funding Settlement 2022/23
All roads ultimately lead back here.
Approved earlier this month, it includes about £16.3bin in funding for councils in England - a 1.8pc decrease on the previous year when adjusted for inflation.
This increases local authorities’ ‘core spending power’ by 4.6pc in real terms compared to the previous year (according to a House of Commons Library report).
But only if they take full advantage of the council tax-raising powers it confers on them - which means the burden falls on taxpayers.
What the Local Government Association says
In its response to the settlement, the LGA welcomed the boost to spending power - but with heavy caveats.
“The government forecasts are based on the assumption that every local authority will raise their council tax by the maximum permitted without a referendum,” it said.
“This leaves councils facing the tough choice about whether to increase council tax bills to bring in desperately-needed funding at a time when they are acutely aware of the significant burden that could place on some households, especially in light of the steep increase in food and energy costs.”
The LGA particularly criticised the continued reliance on the adult social care precept to fund a sector which is ‘facing severe financial and capacity challenges’.
The view from Greater Manchester
These are all points echoed by Councillor Tom McGee, deputy leader of Stockport council, which is putting council tax up by 3.5pc - made up of a 1pc increase in the general levy and a 2.5pc uplift in the adult social care precept (1.5pc deferred from last year).
“The council are basically saying to us ‘you have to do this if you want to provide services and don’t come back to us saying you don’t have enough money if you don’t put it up,” he told the Local Democracy Reporting Service.
“That has put us in a difficult position because, to be honest, adult social care should be funded from general taxation. It should not be down to citizens across the country.
“Council tax is difficult enough without that second ring-fenced burden on us.”
He also hit out at Boris Johnson for not delivering on his pledge to ‘fix the crisis in social care once and for all’.
“The Prime Minister was elected in 2019 on the basis they were going to sort out adult social care and we are still dealing with it,” said the Labour councillor.
“One argument will be ‘we put a lot of money into the health service,” he continued.
“But it’s not going into adult social care. It’s not going into looking after people in their own homes or care homes that councils run.
“Stockport has the highest population of older people, so it’s really important to us. We want to make sure those services for those people, which is why we don’t have options.”
But Martyn Cox, leader of Conservative-led Bolton council, takes a different view.
He said the settlement was more generous than expected and meant that £4m of planned cuts - £2.9m adult services and £1.1m children’s services - would no longer need to be made.
An extra £1m of funding was also identified for highways projects together with £100,000 to improve parking near the town's Moss Bank Park.
Coun Cox said: “This is a challenging time for local councils with additional pressures to come with rising energy costs and increases in national insurance contributions.
“But we are determined not to pass these added costs directly on to Bolton households at a time when budgets are being stretched.
“While some increases are inevitable, we feel this below-inflation rise will strike the right balance needed to protect the services we all rely on."
What the government says
Speaking in Parliament earlier this month, Secretary of State Michael Gove MP said the LGFS would ensure ‘councils have the resources they need to continue delivering key services for their communities’.
He said the settlement would give local authorities ‘the flexibility to generate their own income through council tax, while protecting residents from excessive increases’.
Mr Gove added: “Councils are the frontline of public services within local communities and are the first port of call for so many people – from delivering critical social care services at every stage of people’s lives, to making sure we have efficient and effective waste services in place.
“This Government recognises the vital role they play in our society. This is a settlement that recognises that role."
