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Kevin Peachey, a cost of living correspondent, has reported that documents in the Spending Review suggest council tax is set to increase by 5% annually to fund local services. This rise in bills is also expected to contribute to additional police funding. While local authorities have the power to implement up to a 5% increase each year, some opt for lower raises. Nevertheless, the Spending Review assumes councils will maximize this increase to meet financial requirements.
The review has allocated a 1.1% grant funding increase to local government, resulting in a 2.6% rise in total spending power for councils. This includes funds that councils can generate from council tax, as well as sources like business rates. In cases where councils seek to exceed the 5% cap, they must either hold a local referendum or receive approval from central government. Council tax has predominantly seen a maximum annual increase of 5% due to strained town hall budgets, with some councils facing severe financial challenges resorting to even higher hikes.
Chancellor Rachel Reeves confirmed that nothing has changed regarding the 5% council tax cap imposed by the previous government. She emphasized that councils are not obligated to raise council tax by this percentage, yet it serves as an avenue to invest in crucial services like social care and policing. Local services such as social care, libraries, waste collection, and street cleaning heavily rely on council tax funding. The increase in police spending power by 2.3% a year in real terms is also outlined in the Spending Review, with the inclusion of a police precept within council tax contributing to services like community policing.
In response to the anticipated financial strains, Louise Gittins, chair of the Local Government Association, acknowledged some positive aspects of the Spending Review but highlighted that council budgets will continue to face significant pressure. Tiff Lynch, acting chair of the Police Federation for England and Wales, expressed concerns regarding the ongoing austerity measures impacting police officers and services. Despite the calls for increased funding, the impending financial challenges outlined in the Spending Review suggest a continuation of budget constraints and potential repercussions for the public
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