How council tax could increase for all Greater Manchester residents next year

Councils across the country will be facing difficult decisions over the next couple of months as they set their budgets.

It comes at a time of financial uncertainty over future funding for councils as public sector cuts loom.

Inflation – and in particular, the spiralling cost of energy – has affected local authorities as it has all organisations.

But demand for their services is also increasing as the residents they represent feel the impact of inflation too.

Perhaps one of the most unpopular choices town halls will have to make is whether to balance the books by raising council tax and, if so, by how much.

For many councils, this might be needed to plug the gap in their budgets, but it comes at a time when many are struggling because of the cost of living crisis.

Local authorities are allowed to raise council tax by up to 5 pc from April – any higher than that, and a referendum would be held – which is made up of a 2.99 pc increase plus an additional 2 pc that is ringfenced for adult social care only.

On top of this, metro mayors like Andy Burnham can add to the bill by raising rates for the police, the fire service and other schemes such as transport.

However, in poorer parts of the country – predominantly in the North of England – raising council tax does not generate as much money as elsewhere.

This is because council tax is calculated according to property values set in the 1990s with households which were the least valuable paying the lowest rate.

In Greater Manchester, nearly two thirds of households are classed in the lowest two bands of council tax which means that less money is collected.

And of the money that is owed in council tax, as little as 90 pc is actually collected in places like Manchester where more people struggle to pay. 

The ‘double whammy’, as one Labour source puts it, is that people in poorer parts of the country often require more services from their local authorities.

Furthermore, local authorities claim that if they do not raise council tax by the full amount available, the government would assume they have more money than they actually do and this could  affect the funding it receives in the future.

The government has said this assumption is ‘incorrect’, but admits that future funding decisions are based, in part, on the level at which council tax is set at.

Over the coming weeks and months, local authorities will announce what level they want to set council tax at in the next financial year with the final decision to be voted on by councillors in each borough no later than March.

Manchester council has already proposed the full 4.99 pc increase which starts from April.

Greater Manchester mayor Mr Burnham is also asking for an annual increase of at least £10 for all ratepayers in the city-region to help fund GMP.

This increase – which is £15 for Band D properties – is the maximum allowed.

An announcement about the other council tax precepts set by the Labour mayor is expected to be made later this month.

Here is what four of our most local of the 10 authorities in Greater Manchester have said about council tax so far.

Oldham

Oldham council is still finalising its spending plans but has already said that over the next two financial years, it will need to find £42.55m worth of savings. 

Rising fuel and energy costs, an increase in the Real Living Wage, greater demand for services after Covid and now the Cost of Living crisis, have all been blamed.

Launching a public consultation on the budget this week, the council said ‘realistic options’ that would cut costs or produce income will be looked at.

However, it has not said whether it will increase council tax and by how much.

Manchester

This week, Manchester council proposed a full 5 pc hike, which means at least £50 more a year for all households in the city which do not receive council tax support. 

This would take the total bill for Band A properties – which accounts for most homes in Manchester – to around £1,300 in the next financial year.

It comes after councils were told how much money they could expect to receive from the government next year in the week before Christmas.

The provisional financial settlement puts Manchester council in a better position than it expected, closing the £6.7m budget gap it had previously projected.

Rochdale

In December, a Rochdale council report assumed a general increase in council tax of 1.99 pc together with a 1 pc increase in the adult social care precept for the next two years.

However, this was before local authorities were told how much money they could expect from the government in the next financial year.

The report explained that a 1 pc increase in council tax is approximately £1m.

The financial forecast revealed a gap of £5.28m next year, rising to £15.8m in the following year, according to the latest information available at the time.

Tameside

A public consultation was launched in Tameside last month asking residents about their spending priorities for the council’s budget.

The local authority said it has been left in a position where it has to find new and innovative ways to provide the services our residents want within more limited resources.

However, the town hall has not confirmed whether it is considering a council tax increase and, if so, by how much.

Last year, the local authority raised council tax by 3 pc which cost residents an additional £31 a year at least.

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