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Inflation 2%?council Tax Rises To Be 'limited' To 5% Till Elections

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Prescott offers extra £1.1bn to limit council tax rises to 5%

Patrick Wintour

Tuesday December 6, 2005

The Guardian

John Prescott, the deputy prime minister, moved to dampen the effect of council tax rises next April and the following year by offering an estimated £1.1bn extra cash. Ministers insisted that the proposed settlement meant council tax need not rise by more than 5% this year or next.

Phil Woolas, the local government minister, also promised to cap councils if they exceeded such rises - a sign that ministers are determined to do everything possible to prevent big losses of seats in the May elections. Councils depend on central government grants for three-quarters of their spending.

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The chief sufferers look likely to be adult social services, metropolitan counties and police authorities. The Association of Police Authorities claimed police forces across England and Wales face a funding gap of £250m after receiving a provisional settlement from the government of about half the rise needed to maintain current levels of service.

In the overall settlement announced yesterday, the government provided an extra £305m for 2006-07 and a further £508m in the following year, the first two-year settlement provided to local government. This extra formula grant is on top of the extra cash set aside for local government in the budget in the spring.

Mr Woolas said the government grant would be rising by 4.5 % and 5% in 2006-07 and 2007-08. But Sir Sandy Lockhart, the Local Government Association chairman, said variations in grant distribution meant that nearly a quarter of councils would be receiving only 2% increases.

"The deal worth £1.1bn is better than was expected but still leaves many councils having to face tough choices between council tax increases and cutting services," he said.

The LGA had previously warned of a £2.2bn black hole but subsequent talks with Mr Prescott appear to have softened that view. The association claimed that other funding commitments made by Whitehall yesterday to cover new burdens, such as the licensing regime and asylum, meant the total value of the settlement was £1.1bn.

Mr Woolas told MPs: "We expect to see average council tax increases in each of the next two years of less than 5%. Local government should be under no illusions: if there are excessive increases we will take capping action."

Case study

Liza Langden and her partner Mark Ryan from Basildon in Essex are typical of the young families at the bottom of the property ladder, unable to buy or even rent in the private sector.

Liza, Mark and their child, 20-month-old Tegan, share a one-bed ground floor council flat. The lounge is 10ft x 10ft and the bedroom 10ft x 6ft. Mould grows on the wall, the building's bins are outside the kitchen window but at least the drug dealer who used to live above has gone.

Mark works full-time and Liza part-time, and the only welfare benefit they receive is £17 child benefit. They keep up with the rent of around £260 a month. They would rent privately and buy if they could, but in their part of Essex, two-bed houses start at £130,000 while private rents on a two-bed flat are £600 a month and upwards. Given the expense of raising a child, they say the cost is out of the question.

"The council says this is all we're entitled to, and told us to sign a permanent tenancy or they'd evict us," Liza said. "We're not asking for a palace or even a back garden, just somewhere where Tegan can at least have some space to move in."

Edited by brainclamp

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Liza, Mark and their child, 20-month-old Tegan, share a one-bed ground floor council flat. The lounge is 10ft x 10ft and the bedroom 10ft x 6ft. Mould grows on the wall, the building's bins are outside the kitchen window but at least the drug dealer who used to live above has gone.

Mark works full-time and Liza part-time, and the only welfare benefit they receive is £17 child benefit. They keep up with the rent of around £260 a month. They would rent privately and buy if they could, but in their part of Essex, two-bed houses start at £130,000 while private rents on a two-bed flat are £600 a month and upwards. Given the expense of raising a child, they say the cost is out of the question.

Assuming they're claiming all the benefits they're entitled to, then they must have a joint income of over £55,000 per year to not receive Working Tax Credit or Child Tax Credit, so my sympathy is rather limited.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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