Ministers approve 6% hike in council tax bills to help fund social care

Local authorities will be allowed to raise council tax bills by 6% over the next two years to help raise cash for social care in local communities, Sky News has learnt.

Hi Ministers are expected to announce the measure on Thursday in a bid to plug the funding gap in care services for the elderly and disabled.

Under the plans, local authorities will be able to accelerate council tax increases already pencilled in for this parliament by the former chancellor George Osborne.

Mr Osborne announced in November 2015 that councils would be able to raise council tax by 2% a year between 2016/17 to 2019/2020 to raise almost £2bn in social care. But under the new proposals, councils are expected to be allowed to front-load those planned increases to bring in more money sooner.

Senior government sources told Sky that councils will be allowed to add 3% to council tax bills next year and a further 3% the year after as long as the money is spent on social care.

This could see the average council tax bill rise by nearly £100 over the next two years: a 3% increase to the average Band D property bill of £1,530 (2016/17) amounts to £45.80 a year.

Under Mr Osborne's original plan the average council tax bill would have gone up by 2% a year over three years to 2019/20 - an average of about £30 a year.

The Treasury has been looking at this policy for a number of weeks and wanted to announce the measures in the Autumn Statement. But Number 10 blocked the move, saying the Prime Minister needed more time to look at the options amid concerns that accelerating council tax hikes would run counter to Theresa May's commitment to help the 'just-about-managing' families.

While the Government will allow councils to accelerate the planned increases announced under George Osborne across the parliament, they will not be allowed additional revenue raising powers.

A Government source said giving councils more revenue-raising abilities would enable them to plug the short-term gap in social care funding, but acknowledged a longer term solution would be needed to deal with the emerging social care funding crisis.

The Government figure acknowledged that council tax rises were only a partial solution, given that poorer or less populated areas of the country find it harder to raise as much money as wealthier and more populated parts of the UK, which is in turn opening up growing divisions in provision in different parts of the country.

One area the Government will look to do more on is the integration between local authority social care and NHS services in an effort to avoid duplication and find efficiencies.

Social care funding has fallen by 9% in real terms over the past five years, with local government blaming it on the cuts in their funding from central government. This has had a knock-on effect for the NHS with old and frail patients increasingly being admitted to hospital because of a lack of community provision.

Councils have warned that even if every local authority imposed the maximum extra levy, social care will still face a funding gap of at least £2.6bn by 2020.

Norman Lamb, the Liberal Democrat health spokesman and the former care minister, has called for a cross-party commission on social care to ask the public how much they are prepared the fund the service.