Council tax freeze saves families over £150 a year but costs public services up to £2.8bn

The Chartered Institute of Public Finance and Accountancy (CIPFA) has today released its annual council tax survey which reveals a virtual freeze on council tax across England in 2015, with the average Band D household’s council tax only set to increase by 1% in the year, equivalent to just under £16.

The survey did though show significant regional variation in the level of council tax increases, with some areas such as Greater London only raising council tax by around £2 on average while other regions such as the East Midlands saw average increases of around £27.

The survey shows that councils across England will raise their council tax for an average Band D property to £1,483.92 in 2015-16 up from £1,467.94 in 2014-15. This small increase is another demonstration of the effect of the Government’s council tax freeze grant and referendum cap on local authorities’ setting of council tax rates.

However, analysis from CIPFA has found that if council tax had risen in line with RPI inflation over the Parliament (since 2010-11) then council tax would now be £168 higher for an average Band D property at £1,651.74 per household. This higher rate would, however, have provided local authorities with an additional £2.8 billion in funding a year in 2015-16 to support local services.

This £2.8bn is equal to the entire road maintenance budget for the United Kingdom or the Public Health budget for English local authorities in 2014-15.

The Chief Executive of CIPFA, Rob Whiteman commented on the survey findings: “Although it is welcome news that action by the Government has seen households saving money on council tax, it is also important to look at the cost of this. This data shows that if council tax had risen in line with inflation over the past few years there would now be additional funding available for areas in which it is critically needed, such as adult social care which in turn would relieve some of the pressure on the NHS.

“CIPFA believes that we urgently need a debate on our council tax system and more broadly the way we fund local services. We must candidly address whether enforcing a virtual freeze on council tax over an entire Parliament is sustainable and what the Government and local authorities can do to update it to better fund crucial public services.”