Cost of national living wage will put ‘significant pressure’ on struggling councils

LGA says financial benefits of council tax hikes will be mitigated by NLW

Local authorities planning to raise council tax to pay for social care will see any financial benefits depleted by the introduction of the national living wage (NLW), the Local Government Association (LGA) has warned.

Against a background of impending cuts, the government has announced that councils with social care commitments can increase council tax this year by an additional 2 per cent. This is on top of a 1.99 per cent rise, which councils are already allowed to implement so the rise in total will be 3.99 per cent.

And the LGA believes 143 out of 152 social care authorities have approved, or are considering, a rise in council tax.

However, while the LGA estimates that putting up tax could raise around £372m, the imminent introduction of the NLW this April will cost almost as much with estimates around £330m.

LGA vice chair, Cllr Nick Forbes said: “[Councils] are warning communities that despite council tax rising, the quality and quantity of services on offer could drop, as the income will not be enough to offset the full impact of further funding reductions next year and with the national living wage bringing a significant further cost pressure from April.”

Social care councils opting to raise council tax by the additional 2 per cent must spend the money raised on social care. However, these councils are facing government funding cuts for 2016/17 of £2.5bn and council leaders have warned that council tax rises will do little to prevent the need for cutbacks to services.

Council leaders have told the LGA that in an attempt to plug the growing social care funding gaps, councils will need to continue to divert more money for other local services such as filling potholes, maintaining parks and green spaces and running children’s centres, leisure centres and libraries.

They are calling on the chancellor to use the budget next month to bring forward the planned £700 million of new funding from the Better Care Fund to 2016/17.

Forbes added: “Councils will continue to do all they can to maintain the services that older and vulnerable people rely on but services supporting the elderly and disabled are at breaking point. It cannot be left to council taxpayers alone to try and fix them.

“Vulnerable members of the community still face an uncertain future next year where the dignified care and support they deserve, such as help getting dressed, fed or getting out and about, remains at risk. Vital social care services will increasingly be unable to help ease the growing pressure on the NHS and the threat of a care home crisis is still very real.”

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