SIGOMA analysis reveals how deprived areas will lose out from Council Tax increases

Posted on November 21, 2022

WORRY AMONG DEPRIVED AUTHORITIES ABOUT UNEVEN IMPACT OF COUNCIL TAX INCREASE

A 5% increase as mooted would raise around £1.4bn for England’s social care authorities, but the amount raised will vary hugely across the country and in a way unrelated to need.

SIGOMA authorities would raise £49 per dwelling on average following a hypothetical 5% increase, 14% less than the English average. Without full equalisation, our members would lose out on £43m, almost £1m per authority.

The same imbalance applies to the regions of the UK. Across the North, a 5% increase would raise £52 per dwelling on average, 27% less than the for councils in the South East. The increase per dwelling in Wokingham (which at £86 per dwelling is the highest), would be more than double Manchester (£39pd) and Stoke (£40pd). Wokingham is the least deprived social care authority. Hull and Manchester are both in the top 10 most deprived authorities.

SIGOMA’s Head of Research and Policy Geoff Winterbottom said: “Reports that the government will rely on higher increases in Council Tax to fund council services are concerning for deprived authorities as it is well documented that the tax is regressive and increases raise less in poorer areas. It is absolutely essential that if a 5% increase is allowed, then the government commit to full equalisation through the Revenue Support Grant. To not do so would the opposite of “levelling up”, and would continue the trend in the last decade of increasing reliance on locally raised taxes, which disproportionally benefit the wealthiest authorities.

Council Tax is a completely inappropriate way to fairly fund care as our analysis shows increases are unrelated to need – the trend is in fact the opposite, with the neediest areas least able to raise funding via Council Tax.

Our members would raise around £300m from a 5% increase, less than a third of the predicted inflationary pressure of £1bn in the next financial year. It is clear that Council Tax is not the solution to the funding crisis in local government, and never has been”.

Analysis Summary

Read the article in The LGC here.

Read our comments in The Observer here