Council Tax Rise: Anticipated Increase by 5.1% between North and South Regions
Article Title: Council Tax Rises Across England: A Look at the Disparities
In a recent announcement, the Department for Levelling Up, Housing and Communities (DLUHC) has revealed that council tax in England for the 2024/25 financial year will increase by an average of 5.1%, amounting to £106 more compared to the previous year, bringing the average band D council tax to £2,171. However, this increase varies depending on the powers of the local authority.
Interestingly, households in Greater London tend to pay less council tax than those in the Northeast, primarily because local authorities in the Northeast have higher spending needs and less revenue from other sources. This requires higher council tax rates to fund local services.
The reason for this disparity can be attributed to several factors. Local councils in the Northeast may face higher costs per household for delivering services such as social care, housing, and infrastructure, partly due to dispersed populations and higher deprivation levels. On the other hand, London boroughs receive additional funds via the Greater London Authority (GLA) precept, business rate supplements, and from central government, partially reducing direct council tax burdens on residents.
Moreover, the government’s funding allocation mechanisms may result in less central grant funding per household in the Northeast, forcing local councils to raise greater council tax income compared to London boroughs.
Iain Murray, director of public financial management at the Chartered Institute of Public Finance and Accountancy (CIPFA), has expressed frustration about the insufficient funds raised from a rise in council tax in some places, even for the maintenance of public services. He further highlights the profound regional inequalities, as the council tax gap between London and the rest of the country continues to widen.
The CIPFA's council tax survey raises questions about the role of local government, the desired provision of public services, and the funding methods for these services. Despite leaving some unanswered questions about the funding of public services and the desired level of service provision, the survey provides valuable insights into the current council tax landscape in England.
[1] Source: CIPFA's council tax survey and various local authority financial statements.
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