'Difficult balancing act' as South Tyneside faces council tax rise

Further council tax increases could be on the cards in South Tyneside as finance chiefs progress with plans for next year’s budget.

The impact of the coronavirus outbreak has left local authorities struggling to raise funds at the same time costs and demands for services have surged.

As local authorities across England finalise their budgets for the 2021/22 financial year, council tax increases are being considered.

Central Government assumes that councils will be able to increase council tax by up to 5% next year – split between a 2% rise in core council tax and a 3% precept for adult social care pressures.

Council chiefs are preparing a budget as the pandemic makes balancing the books a tough task

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While no formal decision on council tax has been taken in South Tyneside yet, finance chiefs say it will be a “difficult balancing act.”

“The council tax level in South Tyneside is the third lowest out of the 12 authorities in the region and has consistently been third lowest for a number of years ,” said Stuart Reid, the council’s corporate director of business and resources.

“The Government sets certain rules every year around council tax and the rules they have set for 2021/22 is a combination of the adult social care precept and core council tax.

“Taking these together they’re placing a limit of 5% which is the amount by which the council can increase its council tax without triggering a referendum.

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“The Government also announced some funding, which is unringfenced but suggested to councils, [which] could be made available to support those who are on lower incomes.

“On both of these issues, we’re looking at options currently.”

The comments were made at a Overview and Scrutiny Coordinating and Call-in Committee meeting on January 20, which was held via videolink and broadcast on YouTube.

Mr Reid was updating councillors on early budget proposals for 2021/22, which include around £8million in savings.

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The finance chief stated that due to reductions in Government grant in recent years, councils have become more dependent on other sources of funding, with council tax “making up a larger and larger proportion of [South Tyneside Council’s] resources going forward.”

As a result of this, Mr Reid explained, “decisions around council tax and its levels therefore become more and more critical.”

At this week’s scrutiny panel, councillor Geraldine Kilgour asked how the council would strike a balance between supporting adult social care services and “balancing the books” when setting council tax.

She said: “We all acknowledge the absolutely critical need for our social care monies to be spent in the right direction and our aged population ever increasing.

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“I wonder about the council tax increase and about hitting a real balance with the level that we’re levying towards our community in very difficult times but also balancing the books.”

Mr Reid responded: “Council tax is a key part of resource going forward but it is a tax and is a bill that many residents would receive.

“It’s always a very difficult balancing act between ensuring that the finances of the council and the services which it provides continue to be sustainable – not just next year but the year after and so on – and issues of affordability for our community.

“That’s a balancing act that has always got to be achieved.”

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A further update on the 2021/22 budget, including proposals for council tax, will be set out to cabinet at their next meeting on February 3.

The final budget proposals will be considered by borough council at a virtual meeting on February 25.

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