Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 3
3
Rejected
Paragraph: 40
Council tax is outdated, regressive, and disproportionately impacts deprived local authorities' funding.
Conclusion
There is widespread agreement that Council tax is outdated, regressive, and long overdue for reform. The Government’s increasing reliance on council tax to fund local authorities is causing a disproportionately negative impact on funding levels for authorities in the most deprived areas of England. The Government’s imposition of referendum thresholds for increasing council tax is restricting local authorities’ abilities to raise sufficient funding to fulfil their statutory responsibilities, in response to reductions in central Government grants, increased demand for services, and inflationary pressures.
Government Response Summary
The government acknowledges the need to improve the local government finance landscape in the next Parliament but states it has no plans to revalue council tax bands and defends its existing referendum principles for council tax increases.
Paragraph Reference:
40
Government Response
Rejected
HM Government
Rejected
5. The Government remains committed to improving the local government finance landscape in the next Parliament. The starting point for this work should be consideration of the purpose and functions of local government. The government confirmed in the Policy Statement of 2022 that in response to calls from the sector the government is prioritising stability in this Parliament and will work with local government and the wider sector on the new challenges and opportunities they face in the next Parliament. 6. The Government has no plans to conduct a revaluation of council tax bands. A revaluation would be expensive to undertake and it would particularly risk penalising those on a lower income, including pensioners, who have seen their homes appreciate in value, and might face a substantial increase in tax without having the income to pay it. This was reaffirmed in our response to the committee’s inquiry on council tax, our formal response to which was published on 1 February. 7. The Government’s manifesto commits to continuing to protect local taxpayers from excessive council tax increases. Referendum principles are thresholds, not targets, and strike a balance between allowing local authorities to make tough decisions to address pressures on services while protecting local residents from excessive increases. Every decision to raise council tax is taken locally, and councils can raise council tax above the referendum threshold, provided they have the backing of their residents through a referendum. 8. The Government believes that any increases above the current referendum threshold, where the Government has provided additional flexibility, should only be considered in the most serious of circumstances.