UK Chancellor Urged to Find Extra Funding for 'Vital Services' to Avoid £500 Council Tax Rise

UK Chancellor Rishi Sunak is under pressure by the Local Government Association (LGA) to include extra funding from the central government in the forthcoming spending review in order to avoid a 25-percent rise in council tax.

If Sunak fails to find more funding for social care and other "vital services", British families may face paying £500 ($675) more in council tax a year to help the sectors stay afloat.

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The association argued that due to the rising costs of caring for an elderly population, councils now need an extra £8 billion ($10.8 billion) by 2024/25 to keep their services at current levels.

The LGA claimed that there are no government plans to use the £36 billion ($48.6 billion), expected to be raised from the new Health and Social Care levy, for social care funding.

LGA Chairman James Jamieson, for his part, pointed out that councils "continue to face severe funding and demand pressures that will stretch the local services our communities rely on to the limit".

According to him, securing "the long-term sustainability of local services must therefore be the top priority in the spending review".

Jamieson stressed that if the government wants to emerge from the COVID-19 pandemic "with a society that is truly levelled up, the vital services that councils provide must be at the heart of it".

"Councils need certainty over their medium-term finances, adequate funding to tackle day-to-day pressures, and long-term investment in people and transforming places across all parts of the country to turn levelling up from a political slogan to a reality that leads to real change for people's lives. Levelling up has to also mean a radical reset of the relationship between central and local – building back better means building back local", he added.

The remarks come as the UK Office of Gas and Electricity Markets (Ofgem)'s latest price cap came into effect on 1 October.

It means that at least 15 million UK households face a £139 ($193) increase in their energy bills, from £1,138 ($1,583) to a record high of £1,277 ($1,777) a year, according to the British energy regulator.

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The new price cap entered force after a drastic rise in wholesale gas prices in Britain led to the closure of nine suppliers across the UK in recent weeks.

In early September, Sunak said that the conclusions of the 2021 Spending Review would be announced on 27 October, when he will "set out how we [the government] will continue to invest in public services and drive growth while keeping the public finances on a sustainable path".

The chancellor urged ministers to be "clear-eyed" about the negative implications of the COVID-19 pandemic, adding that if the government wants to meet their financial commitments in the future, both at home and overseas, "we must act now to rebuild our fiscal resilience".

The Financial Times, meanwhile, has cited an unnamed government source as saying that the upcoming review will be "quite tough" in terms of outlining budget totals for Downing Street departments in the next three years.