Eric Pickles has announced a cap of 3.5% on council tax rises for this year’s budgets from April 2011 to April 2012. The Government has previously announced that councils who set an increase of less than 2.5% will be refunded the money. Although council’s are facing huge budget cuts it seems unlikely that they will opt to set council tax increases above 2.5% up to the cap of 3.5% as they will in effect be worse off next year. There are some more complicated aspects to this that councils will be looking at, particularly the effect on their base budget for future years. Here is an extract from a statement that Eric Pickles made to Parliament this morning
The Secretary of State for Communities and Local Government (Mr Eric Pickles): On 13 December, I indicated that when the House debated the final local government finance report I would set out council tax capping principles that will apply to local authorities’ budgets for 2011-12. I am therefore now informing the House that I will consider an authority to have set an excessive increase if:
(a) the amount calculated by the authority as its budget requirement for 2011-12 is more than 92.5% of —
(i) the authority’s alternative notional amount; or
(ii) where no such amount has been specified for the authority, the authority’s budget requirement for 2010-111; and
(b) the amount calculated by the authority as its Band D council tax for 2011-12 is more than 3.5% greater than the same amount calculated for 2010-11 (except see below).