Millions of council taxpayers across England are in line to see their council tax bills frozen next year as a result of a deal struck in the Spending Review, Eric Pickles announced today.
Despite the tough fiscal decisions being taken in the Spending Review, ministers have been able to honour the coalition agreement to freeze council tax.
The Treasury has set aside an extra £650 million to help local authorities in England freeze their council tax next year, meaning local taxpayers living in an average Band D home in England could save up to £70.
Council tax has more than doubled since 1997 and Ministers believe that a freeze will offer real help to hard working families and those on fixed incomes, such as pensioners. Scotland has benefited from a council tax freeze for a number of years without adversely affecting frontline services. During the period that Scotland has had a freeze in place the average bill in England has risen, so that an equivalent Band D home now pays £290 a year more than that north of the border.
The new grant scheme will be open to all billing and major precepting authorities, including police and fire authorities, which decide to freeze or reduce their council tax next year. If they do, they will receive additional funding in 2011-12, equivalent to raising their 2010-11 council tax by 2.5 per cent. The Spending Review also commits to providing authorities with additional funding in future years to “lock in” the benefits of the one year freeze and help ensure council taxpayers will not face subsequent excessive increases.
The news of funding for a council tax freeze comes ahead of Government plans to legislate in the next month’s Localism Bill to give local residents new powers to veto excessive council tax rises that will replace Whitehall capping from 2012-13 onwards. Until then the Secretary of State is clear he reserves the right to use capping powers against any individual authorities which ignore the freeze and set excessive council tax increases.
Ministers have already confirmed there will not be any council tax revaluation in England, which could have resulted in some households facing hefty tax increases from moving up council tax bands. Four times as many homes moved up one or more bands than down in the 2005 council tax revaluation in Wales.
Communities and Local Government Secretary of State, Eric Pickles, said:
Hard working families and pensioners have seen their council tax bills more than double since 1997. But the new Government is standing up for hard-pressed local residents, providing special funding to help councils freeze their bills next year. Further financial freedoms announced for councils will mean they can better protect frontline services like rubbish collections and care for the elderly.
The new Government has already stopped the council tax revaluation which would have lead to higher council tax bills over this Parliament for many families. And we will give local residents a new power to veto excessive council tax rises in the future, to protect the interests of local communities and strengthen local democracy.
Notes for editors
1. A table listing the potential saving for households in each billing authority in England is available to download below. Average Band D council tax in England excluding parishes is currently £1,420. Stopping a 5 per cent council tax rise (the last Government’s capping threshold in recent years) would therefore save £71 in 2011-12. Should an average 2.5 per cent rise have occurred the saving would have been £35.
2. An indicative breakdown of the estimated grants, based on 2010-11 figures, that individual local authorities will receive has been published today to help councils with budget planning. Final grants will be published once the Department has received councils’ own 2011-12 figures in March next year. The full table is available to download below.
3. The council tax freeze offer will apply separately to each billing and major precepting authority in England (rather than to each council tax bill issued). Billing authorities include shire districts, metropolitan districts, London Boroughs and unitary authorities and major precepting authorities include county councils, fire and rescue authorities, police authorities and the Greater London Authority. The Government is urging town and parish councils to exercise restraint and make sure no council taxpayer faces an increased bill.
4. If an authority sets its basic amount of council tax in 2011-12 at a level which is no more than its basic amount of council tax in 2010-11, it will receive a grant equivalent to a 2.5 per cent increase in its 2010-11 basic amount of council tax multiplied by the authority’s tax base for 2011-12 (rounded to the nearest pound).
5. This offer will also allow a local authority to reduce council tax (an absolute reduction in cash terms) if they wish, and still receive the 2.5 per cent grant in full.
6. An un-ringfenced grant in support of the scheme will be paid to each eligible billing and major precepting authority based on the formula. Payments to authorities will be made through the grant-making powers in section 31 of the Local Government Act 2003 and by instalments over the period April 2011 to January 2012 to mirror authorities’ monthly income stream from council tax receipts.
7. For the subsequent Spending Review years the Government intends to provide the same funding via ‘section 31 grants’ to continue to offset council tax income foregone during the period of the freeze, so avoiding any ‘cliff-edge’ effect.
8. In June 2010, the Government announced that it will introduce measures through the Localism Bill to scrap capping and allow local residents to veto higher council tax rises instead through local referendums. Subject to Parliamentary ratification, these provisions will apply from 2012-13. Prior to this legislation, the Government is prepared to use its capping powers to stop excessive increases this year in 2011-12 by local bodies which intend to impose big rises and disregard the offer of freezing their residents’ bills.
9. In the Spending Review, the Government has also giving councils significantly more freedom to decide how to focus money on local priorities and protect frontline services and voluntary groups, by freeing up ring-fenced funding and rolling more grants into formula grant.
10. The police authorities of Greater Manchester and Nottinghamshire that are subject to capping in advance for 2011-12, will be able to take part in the scheme. Decisions on how the Government proposes to proceed in relation to these authorities will be made at the same time as the provisional Local Government Finance Settlement.
- The Government is providing funding for police authorities who freeze their precept in 2011-12. Provision for this was included in the police settlement announced on 20 October.
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