Published On: Wed, Aug 21st, 2019

Council tax shock: MPs demand tax band shake-up to plug £5bn black hole | UK | News

They are suggesting new categories at the top and bottom of the scale in a “long overdue” overhaul. It comes amid claims public services are at breaking point because of funding cuts, changes to the way cash is raised locally and restrictions on increasing council tax. Clive Betts, who heads the Housing, Communities and Local Government Committee, urged the Government to “get real”.

He said: “There is a disconnect between the services taxpayers expect their local authorities to provide and the level of service possible under current Government funding.”

MPs on the committee are also demanding a review of the council tax system, which they called a “regressive tax disconnected from the true value of properties”.

In a report on local authority finances, they said: “A review should consider the case for creating new tax bands at the top and bottom of the scale.

“Any changes should be implemented without dramatic increases for individual households and be revenue neutral at a national level.

“However, they must produce a progressive tax system in the long term.” The report also said a business rate retention scheme for authorities “lacks transparency”.

MPs say it is too complicated, trying to promote development while rebalancing funding.

Labour MP Mr Betts added: “Taxpayers are shelling out more but getting less. This comes at a cost to continued confidence in local authorities to provide the services they need.

Democracy and accountability in local government is paying the price for central government spending decisions.

“The Government has a duty to establish a funding settlement that enables local authorities to provide services to meet the needs of their local communities.

“Over the last decade, we have seen a regular chipping away at funding while adding further statutory obligations for them to meet.

“This constant stress on local government is now compounded by a failure to even set out how much money they will be allocated in the next financial year.”

The Local Government Association estimates there is an annual £5million black hole in funding.

Chairman James Jamieson said the Chancellor should ensure councils are well funded in his next spending review. 

He said: “Only with the right funding and powers can councils meet their legal duties and protect the range of other valued local services which make a positive difference to communities and people’s lives.”

The report also noted that rising social care demands are placing an intolerable financial burden on local authorities, with the system on “verge of collapse”.

It also highlighted that money for transport, culture, housing and planning has been cut by more than 40 per cent.

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