Why your council tax could go up by 40 times the rate of inflation

Council tax bills could be set to rise. Credit: PA Wire

The Government announced its settlement with England's local authorities today.

The bad news: the central government grant to local councils is being heavily slashed.

The good news (for councils): they can offset some of those losses by putting up council tax.

Councils have been told they can now increase the local tax by up to 2% each year (any level above this requires a local referendum).

In addition, the chancellor announced in the Autumn Statement that local authorities who run social care services can increase council tax by another 2%.

Chancellor George Osborne. Credit: PA Wire

The social care precept is expected to add £23 per year to bills for the average Band D property.

So in some local authority areas council taxpayers could see bills rise by as much as 4% in 2016/17.

Council tax payers are increasingly being asked to fill part of the black hole left by cuts in the central government grant.

But when inflation - as announced this week - is running at 0.1%, it means some English councils will be increasing council tax by 40 times the rate of CPI inflation.

In a statement to ITV News, Local Government Secretary Greg Clark said:

Despite doing the responsible thing and investing in social care for the nation’s ageing population, council tax bills will be the same in real terms at the end of this Parliament as they were in 2010.

– Greg Clark