A consultation has opened this week on revised Council Tax increase proposals.
The context of the Council’s budget considerations for 2023/24 has changed considerably in recent weeks with the Government’s Autumn Statement and subsequent financial statement both moving the goalposts.
They have decreed that Council Tax can now increase by up to 2.99% in the general charge plus an extra charge (called a precept) of up to 2% to help fund adult social care. This means there can now be a 4.99% increase without the need for a costly local referendum – 2% more than the original limit.
The Government has put off until 2025/26 making the most difficult decisions about funding cuts to address the black hole in public sector finances. It has also provided some additional funding to help us support the most vulnerable and towards inflation cost, although not enough to cover the expected £42m extra impact of inflation in 2023/24 and 2024/25.
But while the immediate position is not as severe as we anticipated, we still need to plan now for tough times looming on the horizon from 2025/26 to ensure our funding is sustainable and we can continue to provide support to those who need it most as well as the services everyone requires.
Our funding allocation from Government assumes that we will increase Council Tax by the full amount now allowed. If we don’t do this it may impact on future funding settlements, with the Government assuming the Council has more money than we actually do.
The Council is therefore now proposing to increase general Council Tax by 2.99% plus a 2% adult social care precept – a 4.99% increase in total.
Council Leader Cllr Bev Craig said: “Putting up Council Tax is not something we do lightly when we are acutely aware that there is a cost of living crisis facing many of us.
“But speaking to other comparable councils, we know that they have reached the same reluctant conclusion we have – that there is little choice but to look at raising Council Tax in line with the new limit and Government assumptions.
“It’s important to stress that the extra money raised will be used to provide extra targeted support to help those who are struggling the most, support the voluntary sector’s work with them and boost adult social care. Increased support for the social care sector will also help relieve some of the well-documented pressures on the NHS.”
Executive Member for Finance Cllr Rabnawaz Akbar said: “The Government’s financial settlement was slightly better than we feared. But it is only for one year and there is considerable uncertainty beyond that – except that we know public sector cuts are coming down the line from 2025/26 onwards.
“To ensure that our services, especially those that help the people most in need, are on a strong and sustainable footing we need to plan ahead carefully.
“Our guiding principle in all of this is ensuring that we support those most in need while safeguarding the universal services which everyone relies on, from waste collection and roads maintenance to parks and libraries.”
Even a 4.99% increase will still be well below inflation and less than the increase to other household bills. A strengthened Council Tax Support scheme will also mean that Manchester residents on the lowest incomes will get more help with their bills. As of September 2022 there were around 49,000 residents in receipt of Council Tax support.
The Council’s financial position remains challenging against a backdrop of high inflation (currently around 10%), rising interest rates and a volatile economic climate.
This comes on top of more than a decade of central government funding cuts to our budget, even as our city and the need for our services grew. Manchester was one of the hardest hit places in the country by these cuts. Since 2010 we have had to make £428 million of savings to cope with cuts to our government funding and unfunded budget pressures such as inflation and a growing population.
The Council has previously identified around £42m of savings required through efficiencies, income generation and – only as a last resort – service reductions. There will be a bit more flexibility around the timing and extent of savings required and updated savings proposals will be brought forward next month.
The Council Tax consultation is open to all Manchester residents until Tuesday 7 February. Find out more and have your say here