Local Authorities: Funding

House of Lords written question – answered on 6th April 2010.

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Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Spokesperson for the Treasury, Spokesperson for Work and Pensions

To ask Her Majesty's Government what is their most recent estimate of the cost to central Government of providing every council with top-up funding to mitigate for council taxpayers the effect of an expected rise of 2.5 per cent starting in 2011-12.

Photo of Lord Myners Lord Myners Parliamentary Secretary, HM Treasury

It is estimated that it would cost £675 million in 2011-12 and £1,380 million from 2012-13 onwards for central Government to reimburse local authorities in England for the income forgone by not increasing their band D council tax by 2.5 per cent in each year.

Levels of council tax are determined annually by local authorities, not by the Government. Therefore, the council tax figures for 2010-11 used to support this costing are based on the arithmetic average of council tax increases over the past three years. These figures cover all authorities, police authorities and fire and rescue authorities in England. Responsibility for council tax and other local authority matters in Scotland and Wales rests with the Scottish Executive and the Welsh Assembly Government. The above calculation assumes that all authorities are compensated for lost revenue if freezing their council tax in 2011-12 and 2012-13, after taking into any council tax base increases into consideration.

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