Poorer areas could see 'even larger' council tax increases than projected, says IFS Director

7 October 2021, 17:04

By Tim Dodd

Poorer areas could see "even larger increases in council tax" than projected or a cut in council spending unless the government "steps in and redistributes funding" from richer areas, IFS Associate Director David Phillips tells LBC.

It comes as the Institute for Fiscal Studies (IFS) says council tax may need to rise by up to 5 percent a year for the next 3 years - to keep services running and pay for social care reforms.

Shelagh asked Mr Phillips, who authored the IFS' report: "Is there a built in disparity here because of housing costs in different parts of the country? The type of housing stock you have in certain parts of the country will have a lower yield than in wealthier places?"

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Mr Phillips replied: "Our analysis suggests in our central projection, maybe 3.5-4 percent council tax rises will be needed over the next few years, but it could be five percent.

"That's a national picture though. As you mention, in parts of the country where most properties are in band A or band B, you can raise a lot less by council tax than in Surrey where a lot are in band F and G."

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"So unless the government steps in and redistributes funding from the richer to the poorer areas, you might see poorer areas having even larger increases in council tax, or cutting back spending," he said.

"And of course, that's not really in keeping with the levelling up agenda."

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