Taxpayers could end up paying ‘more for less’ as housing tax rises while services are cut

Taxpayers could end up paying “more for less” as municipal taxes are increased as services are cut in response to the pandemic, lawmakers have warned.

Boards across England are facing budget black holes due to government ‘over-optimism’ about the impact of Covid-19.

And this means that households will have to accumulate an additional 4.3% on average in housing tax in 2021-2022.

MP Meg Hillier, chair of the Public Accounts Committee (PAC), called the government’s approach “very concerning”, while the Local Government Association urged ministers to face “all the pressure on costs and the loss of income suffered by councils as a result of the pandemic “.

The committee’s report, released today, said public sector officials told the committee “most councils will have to … make service cuts” as part of the budget as England exits the locking.

The deputies said: “The department’s over-optimism about the impact of the pandemic on local authorities may lead to a reduction in services for local populations.

“Representatives of the local government sector are clear that most councils will not be able to manage solely using reserves and will also need to make service cuts in 2021-2022.

“We have been told of many councils facing multi-million pound budget cuts due to Covid-19, even after government support.

“Typical municipal tax bills will increase an average of 4.3% across England in 2021-2022, meaning local people could pay more for less.”

The Committee recommended that the Department of Housing, Communities and Local Government (MHCLG) and the Treasury ensure that the next expenditure review “includes full consideration of the long-term effects of the pandemic on the finances of local governments and the demands placed on local authorities ”.

Ms Hillier said: “MHCLG has stepped up efforts to avert a wave of board bankruptcies in the wake of the pandemic, but the long-term health of the sector is still precarious.

“The excess of optimism about the resilience of the sector is of great concern.

“MHCLG must be a better champion of local government within Whitehall.”

The committee praised the Department of Communities Secretary Robert Jenrick for the scale of its intervention during the coronavirus crisis, noting that the £ 9.7 billion in increased costs and lost revenue to which local authorities were faced until December 2020 were almost matched by £ 9.1 billion in government support.

Local authorities had to step up support after the March 2020 outbreak, provide grants to businesses, provide assistance to vulnerable people protecting themselves, set up community testing facilities, and take over most contact tracing. difficult, while keeping existing services running as they lost access to many of their sources of income, MEPs said.

But with council budgets already under pressure before Covid, PAC said there were lessons to be learned from responding to the virus.

He said the MHCLG needed a better understanding of financial issues in town halls and town halls, and called for being “more transparent” with the National Audit Office on the “potential for section 114 opinions” – issued when a board fails – to allow better consideration of the issues raised when a board fails financially.

The committee also advocated for the long-delayed municipal finance reform to be undertaken in the context of the post-pandemic recovery.

Sharon Taylor, chair of the LGA’s resource council, said the committee was “right” to recognize “the significant financial support” given to the councils.

She added: “This support will need to be kept under review and we continue to call on the government to address, in their entirety, all of the cost pressures and revenue losses suffered by the councils as a result of the the pandemic.

“Boards continue to face significant demand pressures on daily services and revenue losses, such as local taxes, fees and charges.”

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About Natalee Broderick

Natalee Broderick

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