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Councils in England are set to increase council tax by up to the maximum 3.99% allowed, while London maintains a virtual freeze, figures released today by the Chartered Institute of Public Finance and Accountancy (CIPFA) reveal.
In its annual council tax survey, CIPFA finds that council tax in England (excluding London) will rise by an average 3.6%, adding £54 to the average Band D bill. However, Greater London council tax payers will see an average increase of just 0.6% or £8.04.
As highlighted during the Treasury’s 2015 Spending Review, councils are entitled to a 1.99% general increase on last year’s council tax, plus 2% on top for councils providing adult social care.
Across the country, households will see the largest increase in council tax since 2008. The figures, on the whole, reflect changes being made to the revenue support grant (RSG), a grant provided by Central Government to local authorities each year.
To meet the Office of Budget Responsibility (OBR) projections, outlined in the 2015 Spending Review, council tax will need to rise by 3.8% per year over the next four years, potentially adding £181 to the average Band D bill in England by 2020. This marks a significant policy change. Previously, the Government strongly encouraged councils not to increase their council tax by offering a freeze grant to compensate. The freeze grant is no longer offered.
Rob Whiteman, CIPFA Chief Executive said: “Councils have made by far the biggest efficiencies in the public sector and with the Government incentives over the last Parliament council tax has remained relatively static. But things have changed. Councils are effectively being encouraged by Government to raise council tax, which marks a contrast to its stance in previous years.
"Over the next four years, Government will be making fundamental changes to how councils are funded, essentially withdrawing Whitehall grants by allowing councils to keep more local business rates. This is a very positive move for local democracy, but there must be clarity on the detail of the new system to show how relatively less well-resourced authorities will fare."
Each council makes its own decision on tax rises and there will be several contributing factors to why London has a lower than average council tax, not least because the Greater London Authority (GLA) has reduced its precepts. If you exclude these reductions, the average Band D bill for London would have seen an increase of 2.7%. This is still less than the rest of the country and so it is likely that London authorities, whilst often high need authorities, are generally less reliant on council tax than the rest of the country. The political cycle with Mayor of London elections may be a factor.
Total adult social care precept income for England in 2016/17 will be £385.2m out of a total possible amount of £ 394.3m
Inner London has the lowest average Band D increase in 2016/17 at £4.96, while the North East has the highest at £59.62
CIPFA Council Tax Survey by Numbers
Average Band D Equivalent
Based on 69% Billing response
(including Parish / Community)
76% of billing responders confirmed
Based on 94% Precepting response
96% of precepting responders confirmed
Other Non-Metropolitan Authorities
England (excluding London)
South East (excluding London)
East of England
Yorkshire & the Humber
CIPFA’s Council Tax Survey was based on 314 responses to questionnaires sent to 420 authorities in England and Wales - a 75% response rate
Of the 314 respondents from England, 283 will be increasing their council tax
The survey results, upon which this release is based, will be updated regularly on the CIPFA stats website. The site also contains further information to assist in understanding the council tax change.
Referring to RSG, CIPFA’s briefing for the 2015 Local Government Settlement: CIPFA Briefings
Council tax referendum rules:
English authorities can raise Local Council Tax by up to 1.99% on last year without the need for a referendum. Exceptions include:
The Greater London Authority (GLA) is the strategic authority for London and supports the Mayor and the London Assembly. The GLA’s five functional bodies: