Council tax bills could jump by more than £100 in Farnham and Haslemere next April after the Chancellor and South West Surrey MP Jeremy Hunt confirmed councils would be given “additional flexibility” to change council tax levels in Thursday’s autumn budget statement.
Mr Hunt outlined plans in the House of Commons to allow local authorities to increase council tax by up to five per cent a year from April 2023 without a referendum – three per cent for all local authorities and an additional two per cent for local authorities with social care responsibilities such as Surrey County Council.
As Surrey County Council already takes the lion’s share of residents’ tax bills in the county – around 74 per cent – it means tax-payers face a considerable increase in the sum they pay for town, borough and county council, as well as policing, services next year.
Previously, councils could only raise council tax by 2.99 per cent without first putting the rise to a public vote in a local referendum.
But Mr Hunt’s budget states the increases “will give local authorities greater flexibility to set council tax levels based on need, resources and priorities of their area, including adult social care”.
He added this “flexibility” could partially fund up to £2.8 billion next year and £4.7 billion the year after for the social care sector.
But shadow chancellor, Rachel Reeves, warned the “council tax bombshell” will force councils to put up council tax to maintain services, and force residents “to pay more because of the destruction that the Conservatives have reaped on our economy”.
If the rises are taken up in full by local authorities, it could see the average bill for a typical Band D family home increase by more than £100 to just under £2,300 in Farnham, and by the same amount to more than £2,270 in Haslemere from April 1, 2023.
And it may be that local authorities have no choice but to charge residents the maximum-allowed increase, with Waverley Borough Council warning just last week that its budget shortfall is predicted to almost double to £1.5million by 2025/26 as a result of cuts to its central government grant funding and inflation.
The Local Government Association also warned this week that local services face severe cutbacks because of spiralling costs caused by inflation and demand pressures, saying council tax rises of up to 20 per cent over two years would be needed to plug the gap.
Announcing his autumn statement in front of MPs on Thursday, Mr Hunt said his priority was to restore stability to the economy, protect high-quality public services and build long-term prosperity for the United Kingdom.
He outlined a targeted package of support for the most vulnerable, alongside measures to get debt and government borrowing down. He said his plan is designed to fight inflation in the face of unprecedented global pressures brought about by the pandemic and the war in Ukraine.
Measures outlined other than the council tax hikes included:
- Households on means-tested benefits will receive a one-off payment of £900 in instalments, with £300 to pensioners and £150 for people on disability benefits.
- The Energy Price Guarantee, will rise from £2,500, to £3,000 in April.
- State pension payments and means-tested and disability benefits to increase by 10.1 per cent
- Working age benefits will rise by 10.1 per cent.
- The National Living Wage will be increased by 9.7 per cent to £10.42 an hour.
- The threshold at which higher earners start to pay the 45p rate will be reduced from £150,000 to £125,140, while Income Tax, Inheritance Tax and National Insurance thresholds will be frozen for a further two years until April 2028.
- The Dividend Allowance will be reduced from £2,000 to £1,000 next year, and £500 from April 2024 and the Annual Exempt Amount in capital gains tax will be reduce from £12,300 to £6,000 next year and then to £3,000 from April 2024.
- From January 1, 2023 the Energy Profits Levy on oil and gas companies will increase from 25 per cent to 35 per cent, with the levy remaining in place until the end of March 2028, and a new, temporary 45 per cent levy will be introduced for electricity generators.
- Electric cars, vans and motorcycles to pay road taxes from April 2025
Mr Hunt told MPs: “There is a global energy crisis, a global inflation crisis and a global economic crisis. But today with this plan for stability, growth and public services, we will face into the storm. We do so today with British resilience and British compassion.
“Because of the difficult decisions we take in our plan, we strengthen our public finances, bring down inflation and protect jobs.”