News story

Real-terms cut in Council Tax for third year running

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The government's Council Tax freeze deal helps to cut residents' cost of living.

The coalition government’s Council Tax freeze deal has helped deliver a third consecutive year of real-terms cuts to residents’ cost of living, Local Government Secretary Eric Pickles said today (27 March, 2013).

Official statistics released today reveal that the average band D Council Tax level for 2013 to 2014 has changed by just 0.8%, which is equivalent to a real-terms cut of 2.3%.

Over the 3 years the freeze deal has been worth a 9.7% real-terms reduction to residents. Prior to this Council Tax bills more than doubled between 1997 and 2010.

Mr Pickles also praised those councils that choose to freeze or reduce their bills for understanding residents’ needs and highlighting the importance of keeping tax bills down for those worried about their cost of living.

Mr Pickles said:

“Today confirms that Council Tax has fallen by just under 10% in real-terms since we came into government because we have helped local authorities to freeze bills for their residents providing much needed cost of living assistance. This is in stark contrast to the years before when bills doubled.

“This year the majority of councils have taken up our freeze deal which could save the average homeowner as much as £61 – money that makes a real difference to families and those on fixed incomes, like pensioners.”

The government set aside £450 million, payable over the next 2 years, for local government in England to freeze Council Tax in 2013 to 2014. The cumulative effect of the 3 Council Tax freezes is potentially worth £425 compared to a 5% rise in each of the last 3 years for residents in band D homes.

Legislation passed by the government also means that Council Tax payers can now request to pay their April bills over 12 months rather than 10, lowering their monthly bills by £24 for the first 10 months.

Further information

Councils Tax levels remain a local decision. Government previously had the power to restrict Council Tax rises through a centrally dictated cap. This government has scrapped that through the Localism Act, which created a new power for local residents to veto excessive Council Tax rises instead through a local referendum. Councils that wanted to increase their relevant basic amount of Council Tax above a 2% trigger (or £5 for some smaller authorities) were required to put it to a vote.

Local authorities which have frozen or reduced their band D Council Tax will receive a grant equivalent to a 1% increase on 2012 to 2013 band D Council Tax levels. This will amount to £225 million of grant in both financial years 2013 to 2014 and 2014 to 2015.

The official statistics: Council Tax levels set by local authorities in England: 2013 to 2014 were published today. Past band D Council Tax levels are set out in the spreadsheet (Excel 1.45MB).

Billing authorities collect and enforce Council Tax as per the Council Tax (Administration and Enforcement) Regulations 1992 and the Council Tax (Demand Notices) (England) Regulations 2011. For each financial year, billing authorities must issue demand notices (the bill) setting out the amount that is due and how it is to be paid. From April 2013, the demand notice will inform bill payers of their right to pay in 12 instalments.

A recent survey by pollsters Ipsos MORI has found that 64% of voters are not happy to pay more Council Taxes and 65% of those surveyed have not noticed any changes to the quality of council services since the reductions in council funding (Ipsos MORI press release, 30 January 2013).

All councils should be looking to make sensible savings to their budgets and follow every one of the 50 ways to save that was published by the government in December 2012.