TOWN Hall finance chiefs in Wigan now have a council tax rise to consider to help plug the shortfall in adult social care funding.
Councils have been given the option to sanction a two per cent increase as part of chancellor George Osborne’s spending review.
Currently, due to our demographic and aging population, our adult social care costs are increasing by £2.3m per year. A two per cent council tax rise would generate £2m for us, there would still be a shortfallPaul McKevitt
Under previous legislation, a similar rise would have triggered a referendum although the resulting funds must be ring-fenced for social care.
The government’s new terms may force a rethink in the borough with residents having had a tax freeze in recent years.
Council deputy chief executive Paul McKevitt said officers now have several options to consider for the next financial year.
He told the Observer: “We will only know our individual grant just before Christmas but there wasn’t anything in last week’s announcement that had made us think we will have to drastically change our £25m savings target for next year.
“We currently have a consultation going on with the public about council tax and the Deal for the Future, this two per cent option is something we will have to consider.
“But again, we don’t have the full details. We know it would have to be ring-fenced for adult social care and we have the option to do it each year.
“Currently, due to our demographic and aging population, our adult social care costs are increasing by £2.3m per year. A two per cent council tax rise would generate £2m for us, there would still be a shortfall.”
Three stand-out options now face Mr McKevitt and colleagues; continue with a tax freeze, raise by two per cent for adult social care or raise by two per cent plus up to 1.99 per cent more to fund social care AND other services, without triggering a referendum.
A fourth, more unlikely option, would be the two per cent rise, plus a more than two per cent rise and a referendum.
And with Greater Manchester’s 10 local authorities facing a combined financial black hole of £235m, all could follow suit by initiating the two per cent rise as part of their devolution agreement.
Mr McKevitt added: “We only get the full details just before Christmas and obviously we have to have our plans in place so we are making estimates to go off until then. £25m is what we think for next year and I can’t see that will change.”
During his spending review announcement last week, Mr Osborne said: “The truth we need to confront is this: many local authorities are not going to be able to meet growing social care needs unless they have new sources of funding. That, in the end, comes from the taxpayer.
“So in future those local authorities who are responsible for social care will be able to levy a new social care precept of up to two per cent on council tax.
“The money raised will have to be spent exclusively on adult social care - and if all authorities make full use of it, it will bring almost £2bn more into the care system.”