According to the government’s economic forecasters, Households will have to pay hundreds of pounds more in council taxes by 2026.
According to the Office for Budget Responsibility, it expects that the total amount of council tax collected in 2026/27 will be three times higher than it was in 2019/20.
It said receipts will be £12.1billion higher in 2026/27 than seven years earlier. This is equivalent to around £435 extra per household.
Last year the average Band D council tax rate in England was £1,898.
The Treasury announced that local authorities will be able increase bills by a maximum of 3% without the need for a local referendum. 1% of this will go to social care.
That could see town halls increasing council tax bills by up to £57 in April – potentially taking the average to £1,955.
Beers all round: The Office for Budget Responsibility said it expected the total amount raised in council tax to be a third higher in 2026/27 than it was in 2019/20
It said receipts will be £12.1billion higher in 2026/27 than seven years earlier. This is equivalent to around £435 extra per household.
This is in addition to the 1.25 percent increase in National Insurance to pay for social and health care.
To meet rising costs of social care, council tax has been increasing rapidly in recent years. In addition to putting up bills to cover general spending, town halls may also add a precept’ to help pay for social assistance.
OBR stated that “Net council tax receipts continued rising in 2020/21 despite a pandemic (by 6.1%) and will continue to rise at the same rates over the forecast period.
‘By 2026/27, we expect receipts to be £12.1billion (33 per cent) above their 2019/20 level.
“This largely reflects the policy measures that allow councils to increase the adult care precept on council taxes bills, in addition to the almost 2 percent increases in core rates in our baseline forecasts.
The Treasury’s Red Book published alongside the Budget stated that town halls would have the ability to add a 1 per cent social care precept to their bills.
However, this potential increase of 3 percent is less than in previous year.
The precept was allowed last year to reach 3%, which meant that councils could raise bills by 5%.
In the event, the actual average council tax rise was 4.4 per cent last year – taking the average Band D bill to £1,898.
According to the Red Book, “To ensure that all local authorities have the resources they need in order to deliver core services such children’s social and road maintenance, waste management, and child’s care, the referendum threshold for increasing council tax is expected remain at 2 percent.”
“In addition, local authorities with responsibility for social care are expected to be in a position to increase the adult social precept by as much as 1% per annum.
“The Department for Levelling Up, Housing and Communities will detail the principles and proposed approach to allocating grant money through the Local Government Finance Settlement.”
According to the Institute for Fiscal Studies, rising costs for local authorities in social care may lead to increases of up to 3 percent.
A spokesperson stated that it was possible to maintain services by increasing the council tax than the government is willing to allow.
Rachel Reeves, Shadow chancellor, accused Rishi Sunak de imposing the tax burden upon working people.
She stated that there was a National Insurance tax increase – on working people. ‘A council tax hike – on working people.’