Authorities ponder huge council tax rises in bid to balance books
Councils in Shropshire and Worcestershire have been given special permission by the government to raise council tax bills by an inflation-busting 9% in a bid to get their finances back on track.
Local authorities are usually required to hold a referendum on increases which are greater than 4.99%, but today the government has issued seven councils in England with powers to raise the levy above that threshold.
As a result, bill-payers in the Midlands could be facing the highest council tax rises in the country, with Reform-led Worcestershire and Liberal Democrat-led Shropshire both posting 9% increases.
The move has already proved divisive in Worcestershire, with one Reform councillor quitting the party in protest at the changes – while Shropshire Council leader Heather Kidd accused the government of breaking its promises to rural councils on closing a funding gap with urban authorities.
“We are now £4.3m worse off in next year than projected in October. Ministers have ignored the significantly higher cost of delivering services in a large rural county and have removed funding for remoteness factor. The consequences for rural services will be stark,” she said.
Plans to raise bills in the county will go before full council at the end of the month, but if approved the changes would raise an extra £8m for the cash-strapped council’s coffers, as it bids to stave off a long-term financial crisis which leaves it teetering on the brink of issuing a Section 114 notice, a move which would effectively declare the council bankrupt.
The authority is currently trying to close a funding gap of around £50m for the current year, which would wipe out its entire general reserves fund, leading it to apply to the government for emergency financial assistance.
“In reality, this leaves us with no choice but to borrow up to£121m from the government as part of our Exceptional Financial Support ask, significantly increasing our long‑term debt,” she added.
Authorities in Trafford, Warrington and Windsor and Maidenhead can raise their share by up to 7.5 per cent and Bournemouth, Christchurch and Poole Council can raise its share by up to 6.75 per cent.
Meanwhile in Worcestershire, council finance leader Rob Wharton said the authority was facing significant financial pressures due to continuing cost pressures on adult and children’s social care services, with his report setting out Worcestershire Council’s “stark and challenging financial position” before members in a cabinet meeting held last week.
He said the council was considering a wide range of cost saving measures, but said raising council tax was also essential to protect local services.
“Even with a 5 percent rise, Worcestershire remains among the lowest council tax areas nationally.” he said.
“Every 1% increase generates around £3.6 million, which is vital for sustaining statutory services.
“Any decision will be made transparently, balancing affordability with the need to protect vulnerable people and maintain the essential services we have to deliver.”
The planned rise will go to a vote at full council towards the end of the month.
