Autumn statement: Lancashire County Council ‘thinking about’ whether to increase council tax by up to five percent next year under new rules

Lancashire County Council says it will “carefully consider” whether to make use of permission granted by the government to increase council tax by up to five percent next year.

The deputy leader of the Conservative-controlled authority, Alan Vincent, said he been reassured by some elements of the chancellor’s autumn statement - but warned that County Hall still faced “considerable financial challenges”.

However, opposition politicians have condemned the move to allow top-tier authorities like the county council to increase bills by more than they are presently permitted.

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Currently, the largest rise that can be implemented without asking residents for their approval in a referendum is 1.99 percent, plus a further one percent “precept” ringfenced specifically for social care. But, this year, County Hall was able to raise its share of bills further still - by 3.99 percent - by carrying over the one percent social care charge that it chose not to levy in 2021.

Adult and children's social services are amongst the biggest pressures on Lancashire County Council's budget

Under the new arrangements, core council tax will be able to rise by three percent without a referendum, while the social care precept will double to two percent.

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The county council this month agreed £84m of budget savings as part of an attempt to plug a forecast budget gap of almost £160m by 2025/26.

County Cllr Vincent said that the “full picture” of what the autumn statement means for the authority will become clearer only once it learns exactly how much cash it will receive from the government for the year ahead. The final settlements for all local authorities are usually announced just before Christmas.

County Cllr Alan Vincent (left) says that he will have to consider whether to use the new flexibility over council tax rises, but County Cllr Azhar Ali warns Lancashire residents are facing a "double whammy" after the autumn statement

However, the deputy leader - who is also the cabinet member for finance - said that Jeremy Hunt’s statement “recognises some of the most challenging and complex issues facing local government”.

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He welcomed an announcement of increased social care funding and a delay to reforms in the sector that it was claimed would have increased financial and practical pressure on councils if they were forced to implement them when originally planned.

“We are still facing some very difficult decisions in the coming months and years, but the statement gives us some clarity and reassurance in areas such as social care and education.

“The additional flexibility on raising funds locally through council tax is also something we will carefully consider, taking account of the pressures on our services and the impact on residents.

"However, as things stand, the council still has considerable financial challenges ahead and will need to continue to plan accordingly," County Cllr Vincent said.

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But Labour opposition group leader Azhar Ali said that the government’s financial plans amounted to a “double whammy” for Lancashire residents of bigger bills and poorer services. Treasury analysis has estimated that as many 95 percent of local authorities will take full advantage of the ability to make larger council tax rises.

“It’s robbing Peter to pay Paul. [The government is] saying to councils: ‘You’re facing hundreds of millions [in] cuts, but if you don't want to make the cuts, then increase the council tax.

“In Lancashire, we’d have a massive tax bombshell - it could mean up to £100 [extra] on an average...property. And that’s just from the county council - then you’ve got the district [authorities], the town councils and police and fire services,” County Cllr Ali said.

He also blasted what he said would be the “massive impact on the NHS” of a delay in social care reforms, which will eventually introduce a cap on lifetime personal care costs of £86,000 and mean that people are eligible for support with such costs if they have assets of less than £100,000, compared to £23,250 currently.

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Those and other measures had been due to come into force from next October, but after lobbying by the County Councils Network, they have now been pushed back a further two years.

The organisation had warned that an additional 105,000 care assessments would be required each year as a result - which would demand 4,300 new staff were recruited nationwide. There are already almost 295,000 people awaiting such an assessment.

In addition, another 92,000 means tests would be required, necessitating 700 new assessors.

The CCN welcomed what it said was a “brave” decision by the chancellor to delay the introduction of the changes, which it said would have disproportionately affected county councils, increasing the number of care and financial assessments they had to carry out by 64 percent.

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Jeremy Hunt told the Commons that the government would deliver an additional £1bn of social care grant funding next year and £1.7 billion the year after. He said that, factoring in the savings from the delayed reforms - as well as increased revenue from council tax - that would amount to £2.8 billion being made available for social care next year and £4.7 billion the year after.

Mr. Hunt said that the money would help fund around 200,000 additional care packages over the next two years. Adult and children’s social care are amongst the biggest pressures on Lancashire County Council’s budget.

However, David Howarth, the Liberal Democrat group leader on the authority, said that the raising of the cap on council tax increases was “an open invitation [to ask] the council taxpayer to pay yet more”.

“It is astonishing that we’re going to be more heavily taxed than for the best part of 80 years - and this is a government who claim to have economic competence,” he said.

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County Cllr Howarth also warned that a planned increase in fuel duty would hit the social care sector because of the number of staff who rely on cars to make home visits.

Meanwhile, Green Party group leader Gina Dowding, said that the autumn statement was "a disaster for ordinary people” that had been fuelled by the Liz Truss administration’s mini-budget.

“It amounts to taking £30bn away from people who need it during a cost of living crisis. Jeremy Hunt has hit people from both directions - through higher taxes and cuts in public services.

“The services local authorities provide are both valued and necessary for quality of life and yet we are forced to find drastic savings.

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“There is enough wealth in this country but it is concentrated in too few hands. Wealth spread throughout the economy would benefit everybody.

“The Green Party would introduce a one percent wealth tax on the super-rich and increase taxes on unearned income to ensure there is sufficient money to fund the public services we deserve," County Cllr Dowding added.

Delivering his autumn statement in the Commons, Jeremy Hunt said that the government was being “fair in our solutions” to the financial challenge the country was facing.

"Yes, we take difficult decisions to tackle inflation and keep mortgage rates down, but our plan also leads to a shallower downturn, lower energy bills, higher growth, and a stronger NHS and education system.”