Warning over 'tax bombshell'

JIM McMahon MP in the House of Commons

OLDHAM MP Jim McMahon has warned that the public will face a "council-tax bombshell" by 2020 as local authorities struggle to pay for social-care services.

Mr McMahon, Oldham West and Royton MP and Shadow local government minister, said he believed changes to the law, which are currently going through Parliament, are an attempt by the Government to avoid scrutiny of funding shortfalls and to make councils take ownership of unpopular cuts to services such as the crisis-stricken social-care system.

The Local Government Finance Bill would abolish the annual local government finance settlement approved by parliament each year and give the communities secretary executive power to allocate local government funding for services without a vote in the Commons.

The move would make councils directly accountable for a £5.8billion shortfall in funding for social-care services.

The Department for Communities and Local Government says the change would ensure councils are more self-sufficient and accountable for funding services with business rates, 100 per cent of which will be retained by authorities to spend on newly devolved responsibilities, such as public health, by 2020.

However, speaking to the Guardian, the former Oldham Council leader said: "They know there is no new money, and want as little scrutiny of that fact as possible, and they also know that even a 25 per cent increase in the amount of authority funding that comes from council tax won't be able to pay for that. I suspect we'll see some really whopping council tax increases coming by the end of this parliament."

The Local Government Association estimates councils will face an overall funding shortfall of £5.8bn by 2020, £2.6bn of which is specifically related to social-care services.

Mr McMahon said the public would face "a council-tax bombshell" in 2020, by which time the government projects that the total amount of local authority funding raised by council tax will have increased by 25 per cent.

"The cruelty is that the government refuses to take ownership of the problem," he said. "You're asking people to pay more council tax than they've ever done before with absolutely no consideration of their ability to pay at a time when the universal services they think they're paying council tax for are being snatched away."