alford Mayor Paul Dennett has written an open letter to the Chancellor of the Exchequer Jeremy Hunt in advance of the expected budget announcement on Thursday 17 November 2022, to raise concerns on local authority funding and the impact on the city.
The concerns highlighted include proposals to lift the 1% cap on the adult social care precept and 1.99% cap on council tax increases without a referendum.
Mayor Dennett said: “Such a move would suggest that the government are considering further council tax increases to help finance the £33 billion in planned spending cuts, whilst also signaling a further U-turn on the government’s manifesto commitment to protect local tax payers from council tax increases beyond 2.99%.”
Mayor Dennett has argued that in the last seven years the Treasury’s expectations of council tax contributions, within government’s core spending calculations for local government, have massively increased nationally by almost one third, at the same time core funding from the government reduced by £6.3 billion.
The Local Government Association has previously estimated that by 2020 councils will have lost 60p out of every £1 the government had provided to spend on local services.
In Salford, in real terms, these changes have equated to a £232 million reduction in the council’s revenue budget as a consequence of cuts to funding from government and un-funded budget pressures, seeing a reduction of 53 per cent in central government core funding support since 2010.
Mayor Dennett said: “Council tax is also an incredibly uneven and unfair mechanism through which to raise funds and plays out very differently in different areas of the country. In wealthy Surrey, a one per cent increase in council tax would raise around £7 million. In Salford, the 18th most deprived local authority in the country according to the government’s own index of multiple deprivation (IMD), the same rise would raise just over £1 million.”
This year, councils are having to battle to cover unforeseen extra inflationary cost pressures, energy prices rises and estimated increases to the National Living Wage since budgets were set in March.
“The Local Government Association’s own analysis of the funding gap is that it will rise to £3.4 billion in 2023/24 and is also expected to rise further in 2024/25 to £4.5 billion, primarily caused by inflation including soaring energy costs and wage costs caused by a rising minimum wage, and related un-funded pay awards from the Treasury,” said Mayor Dennett.
He continued: “Asking local residents to pay more in council tax is a hugely regressive and even inhumane response to the government’s self-imposed spending restraints. It will cause huge suffering for millions of people, residents and families that are already struggling after 12 years of austerity and disproportionate local government cuts and more recently as a consequence of the cost-of-living and inflationary crises.”
“I implore you and your fellow Cabinet colleagues to reconsider your planned increases to the adult social care precept and council tax, and any further cuts to local authority budgets. Such cuts could have a disastrous, and potentially lethal effect on local authorities up and down our country and more importantly on people’s lives and the residents, communities and businesses we seek to serve and represent in local government.”
