South Tyneside households facing 4.95% council tax hike to help council 'continue to provide services'

South Tyneside Council has revealed its latest spending plans for the 2024/25 financial year as part of its medium-term financial plan, which includes setting annual council tax levels.

Central government assumes local authorities across the country will raise bills by just under five per cent from April, 2024, to help fund local services.

Proposals due to be discussed by councillors in the coming weeks propose an overall increase of 4.95 per cent for South Tyneside taxpayers.

This includes 2 per cent linked to the Government’s adult social care levy, ringfenced for those services, and 2.95 per cent linked to core council tax.

Senior councillors said the proposed increase for council services, if approved next month, would equate to an extra £1.16 per week for an average Band A household, into which the majority of borough households fall.

In addition, South Tyneside Council is providing support through its updated council tax support scheme, which continues to provide reduced bills for around 10,000 working-age residents.

This support, in addition to council tax reductions for people of pensionable age, mirrors the council’s ambition to ‘target support to make things fairer’, especially during the cost-of-living crisis.

Councillor Joanne Bell, cabinet member for governance, finance and corporate services, stressed the council tax rise was needed to protect front-line services.

Cllr Bell said: “Council tax is one of our few streams for income into the council and the Government still have the two per cent adult social care levy, so the core council tax would be the 2.95 per cent.

“That’s £1.16 a week extra for our Band A properties, which are more than 75 per cent of the properties in the borough.

“It’s one of our only streams of income, so in order to continue to provide council services, particularly around adult social care and children’s social care for our most vulnerable, elderly and youngest children, it’s the way we have to go in order to provide those services.

“I know it’s no consolation for our residents, but from the information we have all councils in the North East are looking at the maximum five per cent increase.

“Because unfortunately, the Government doesn’t look on [councils] very favourably if you’re not generating income through council tax when it comes to external funding.

“We’re relying on external funding moving forward to help us with some of our ambitions, and that wouldn’t be looked on very favourably if we don’t take the Government policy”.

Town hall bosses said that since 2010, the average increase in council tax in South Tyneside had been 2.7 per cent which, up until two years ago, was around the level of inflation.

Even with a council tax increase in 2024/25, finance chiefs predict the council tax rate will place South Tyneside at the second lowest level of council tax out of 12 local authorities in the North East for the ‘average household’.

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Council tax proposals, including the breakdown for different bands of properties across South Tyneside, will be discussed at an annual budget meeting next month.

The final council tax bill issued by the council will also include separate amounts levied by other bodies towards police and fire and rescue services.

South Tyneside Council collects these ‘precepts’, with levels due to be decided separately by the region’s Police and Crime Panel and Fire Authority before being reported back to councils.

South Tyneside’s council tax rise falls against a backdrop of cuts to revenue spending, with the council having to make savings of around £7 million in 2024/25, as well as using around £8 million in reserves to balance the books.

Proposed savings for next year are on top of the £201 million the council has already had to save since 2010, with even more spending cuts predicted in future years.

In addition, the council continues to face increased pressures around adult and children’s social care, which account for some 70 per cent of the council’s discretionary budget.

Senior councillors have previously called for more sustainable funding from central government and raised concerns about the current system.

This includes the limitations around generating council tax income in areas where large proportions of properties have the lowest Band A value, as opposed to areas with higher property values.

Cllr Bell added: “It’s exactly the same as the problems with the business rates, there are some very very rich boroughs because they get a vast amount in their business rates.

“We unfortunately are not that lucky as far as business rates go, and with council tax, we have over 75 per cent of properties in Band A.

“We have been waiting for years for the Government’s ‘fairer funding’ scheme to be brought in and we’re still waiting, I think until we get around the table with fairer funding that this is going to continue.

“Unfortunately there’s nothing we can do to make that come any quicker or to generate any further income.

“I don’t think the system is broken, it’s just not working very well.

“I think we’re in a better position than some of our neighbours through the prudent way we have gone about our budget over the last few years.

“However, things are still challenging and always will remain challenging.

“We’re not in a position we would like to be, but we have managed our budgets and have always come in with a balanced budget.

“We will do again for 2024/25 but the savings still need to be made”.

Although central government recently announced English councils will get £500 million of new funding to deliver key services, councils are awaiting information on how this will be allocated.

South Tyneside Council’s cabinet will consider the medium-term financial plan when it next meets on Wednesday, January 31, 2024.

Spending plans will then be considered by all elected councillors at the annual budget meeting on Thursday, February 22, 2024.