Huge swathes of UK to lose out on council funding under Labour | Politics | News
Wealthy areas of England will lose funding as part of radical changes to local councils. Areas with the highest levels of poverty and those unable to collect high levels of council tax will receive more money from central government.
Many are likely to be in the North and Midlands, while the losers are most likely to be in the South. Existing rules, which effectively ban authorities from increasing council tax by more than 5 per cent each year, will remain; but municipalities “facing significant local financial difficulties” will be allowed to apply for exemptions as long as they currently charge below the national average. Local Government Minister Steve Reed said: “We are reforming the funding system that has led to regional divides, postcode lotteries and substandard public services for too many people.”
But a charity set up by personal finance expert Martin Lewis has warned that higher council tax bills could mean more people falling into debt.
Helen Undy, chief executive of the Money and Mental Health Policy Institute, said: “A 10% increase in council tax will hit many households hard and could cause more people to fall behind on bills.
“They will then face a criminal process where councils demand full refunds of their annual bills, extra charges are piled up and bailiffs are sent in – all within six weeks of a single council tax payment being missed.
“This is causing huge distress and plunging people into financial misery and does not help councils make more money.”
In a document setting out changes to the £69 billion allocated to councils each year by central government, the Department for Housing, Communities and Local Government said: “A fairer system means local authorities in the poorest places will now see significant funding increases, allowing them to reinvest in the services local people rely on.
“Whilst some local authorities will receive less government support to reflect an assessment of their needs, we will treat these authorities fairly by making gradual changes over three years and providing transitional funding to help them transform local services.”
The current complex system of ring-fenced grants, including £200 million to councils to help residents quit smoking and £620 million to provide school holiday activities, will be simplified.
Councils will also be allowed to keep all the extra council tax collected from new homes to encourage them to allow developments.
