What would higher council taxes mean for local authorities?

UK chancellor George Osborne announced on Wednesday that local authorities will be permitted to raise council taxes by 2%. Westminster hopes that this hike will cover a shortfall in adult social care funding, but will such a change really help where it counts?

The proposal 

Councils have borne the brunt of austerity, leading to the lowest level of social care funding for 20 years. The Local Government Association (LGA) recently warned that if cuts proceed as planned, social care prevision could be hampered by a whooping £2.9 billion shortfall by 2020.

Allowing local government to increase council taxes may raise £2 billion by the end of the current parliament. Observers are arguing that revenue generated from this change should be earmarked for social care exclusively, though it's unclear how the Treasury would monitor this, and some working in the industry have expressed concern that funds may end up being put to other uses.

The implications

Councils already have the power to raise council tax by 2% without triggering a referendum. The chancellor's changes will allow local authorities to up fees by a further 2%.

While a 4% boost in council taxes may sound like great news for adult social care budgets, the shift will invariably see more households falling into arrears. Research by charity StepChange indicates that this type of priority debt has already grown by 372% since 2010. Officials at Birmingham City Council have also expressed doubt that the suggested increase will be sufficient to deal with the incoming pressures, arguing that "it's nowhere near proportionate to the scale of the problem".

Finding a solution

In the event that council taxes do rise, Enforcement Agents such as Dukes Bailiffs can help local authorities to ensure that additional sums are collected quickly and sensitively.  Councils who go it alone risk being forced to write off debts, leading to a lose-lose outcome that helps neither budgets, low-income families nor those in need of care.

Our expert Debt Advisors distinguish between individuals who can't pay and those who won't, and strive to create payment plans that boost council coffers without leaving vulnerable parties at a loose end.

If you work for a local authority that's thinking about exercising Mr. Osborne's new tax powers, contact Dukes Bailiffs to find out how our ethical and efficient service could help.