Futures Forum: Councils are planning tax rises to cover the mushrooming cost of social care
Last month, the Public Finance blog pointed to tax increases:
Council tax precept could rise to tackle social care crisis | Public Finance
And last week, the Daily Mail carried an extensive piece warning us of what to expect:
Your super-sized council tax bill: Double-digit increases planned to fund growing social-care crisis
- Surrey County Council is holding a referendum on 16 per cent council tax rise
- If it votes to ignore 5 per cent cap, it could pave the way for others nationwide
- Comes after tax increase cap rose, if councils ring-fence money for social care
- Increases will increase pressure on government to reduce foreign aid spending
Thousands of families face eye-watering council tax rises of up to 16 per cent as town halls plot super-sized hikes.
In an unprecedented move to tackle the spiralling social care crisis, councils are preparing to hold referendums on whether they can ignore a 5 per cent cap on annual increases.
Chancellor Philip Hammond's own local authority, Surrey County Council, is considering a 16 per cent rise. If voters approve the increase, which would add £200 to average annual bills, officials believe a string of other councils will try to follow suit. Lancashire County Council is also thought to be considering a vote.
The startling revelations will fuel calls for the Government to ditch its commitment to spend 0.7 per cent of national income on foreign aid. Backbench MPs say it is a scandal that £12billion a year is spent on overseas development while the UK's elderly care is in crisis.
A fortnight ago, Communities Secretary Sajid Javid announced he would raise the ceiling on council tax increases, leaving households facing huge bills to help fund social care. Under the new rules, councils can increase charges for next year by 5 per cent – with 3 per cent ring-fenced for adult social care – rather than the 4 per cent that had been planned.
But now councils have warned they will propose increases well above this, meaning they have to hold a referendum. Surrey County Council is understood to be considering a vote on a 16 per cent rise, which would push up the charge on an average band-D property by £203 to £1,471 next year. Its Tory leader David Hodge has said the local authority 'simply cannot cope' as it faces a budget shortfall of £45million. Mr Hodge is understood to have been summoned to see Mr Javid over the referendum, which may cost up to £1million to hold.
Mel Few, the councillor responsible for Surrey's social care, said last night the local authority's finances were 'on a cliff edge'. He said that unless the Government came up with tens of millions of pounds of extra funding within the next fortnight, 'we are faced with an unbalanced budget and I assume at this stage the thoughts will drift towards a referendum'.
Mr Few said it was too early to speculate on the figure of the proposed rise, but added: 'We are talking big numbers.' He said: 'There is not one county council responsible for social care that is not looking down a black hole. I think once the rest of the councils that are in desperate need see there is a way out, I would not be surprised [if they follow with their own referendums].'
The Local Government Association has said the social care funding gap will reach £2.6billion by the end of this Parliament. It warned measures announced by Mr Javid, including the rise in the ceiling for demand increases, 'fall well short' of what is needed. Councils are facing spiralling costs in providing social care because of the ageing population and the rise in salaries for care workers as a result of the increase in the minimum wage.
Before Mr Javid announced the cap on increases would rise to 5 per cent, 95 per cent of local councils had said they planned jumps of 4 per cent next year, the maximum that would have been allowed without a referendum.
Only one such referendum has taken place. In February 2015, Bedfordshire's Police and Crime Commissioner, Olly Martins, proposed a 15.8 per cent rise in the police precept, which would have resulted in an extra £24.80 on an average band D property. An overwhelming 207,551 residents (69.5 per cent) opposed the hike in a referendum estimated to have cost £600,000
Former Lib Dem health minister Norman Lamb said last night: 'It's frankly embarrassing that Philip Hammond's own local council is having to take drastic action to plug the hole he has left in social care funding. It should not be down to local councils to pick up the pieces after this Government's catastrophic neglect of social care.'
Mel Merritt, of the Care and Support Alliance of charities, said lifting the council tax rise cap by 1 per cent was 'a drop in the ocean'. She added: 'Things are so desperate in social care that councils are looking at lots of hard options. Because the Government is not making the difficult decisions, councils are having to.'
Martin Tett, the Tory leader of Buckinghamshire County Council who sits on the LGA executive, said he expected most authorities would not seek referendums because of the fear of rejection by voters.
A Department for Communities and Local Government spokesman said last night: 'Our long-term funding settlement means local authorities will have nearly £200billion to spend over the course of this Parliament. We've also just announced an extra £900million for social care, meaning they will have a total of £7.6billion to spend over four years.'
Lancashire County Council did not respond to a request for comment.
The Mayor of Liverpool had also planned to hold a referendum in May on a 10 per cent hike, but yesterday scrapped the plan.
Health bosses are planning to slash an extra £5billion from social care funds over the next four years, doctors' leaders warn.
Managers in 44 local areas are drawing up cost-saving plans which will trim £26billion from the health and social care budget. But British Medical Association analysis has revealed this will include £4.9billion from social care.
Double-digit increase planned to fund growing social-care crisis | Daily Mail Online