Hackney Council is considering raising council tax for the first time in over a decade.
The Town Hall announced on Monday plans to increase the charge by two per cent.
Under the plans Hackney’s Band D charge would rise by about £20 per year, raising an estimated £1.3 million to help offset government cuts.
A council spokesperson said today that the proposal to raise council tax follows news that Hackney will lose a further £38m in government funding over the next four years.
The proposal will be debated at the full council meeting on 2 March, when the 2016–17 budget will be agreed.
In February last year the council rejected a two per cent increase in council tax. It claimed the sum raised from such a rise would amount to around £400,000.
At the time Mayor Jules Pipe said: “That is a quarter of one per cent of what the government has cut – it would make almost no difference.”
From 2011 until 2015, the government offered Town Halls a grant if they agreed to freeze council tax.
Explaining the decision to offer grants, the Coalition government said: “Council Tax bills in England more than doubled between 1997 and 2011. We want Council Tax payers to be able to veto excessive rises, to help them reduce their living expenses. We also want to make sure that they get good value for money from their councils.”
It stated it would provide “funding of up to £5.2 billion to help freeze Council Tax over the lifetime of [that] Parliament” and changed the law to give local residents the power to veto what it called “excessive” council tax rises.
This financial year, however, the Conservative government is not offering a cash incentive so Hackney Council says it can raise more money by increasing council tax.
The Hackney Citizen asked the council why it had not raised council tax prior to the government’s 2011 offer of ‘cash for council tax-freeze’.
A Town Hall spokesperson said: “Prior to 2011, councils were in a much better financial position, and, in tandem with careful budgetary management, we were able to maintain a freeze on council tax.
“However, in more recent years, budget pressures have increased, and now the government isn’t offering the freeze grant, we feel the proposed two per cent rise is prudent.”
This article was amended at 14:40 on Wednesday 27 January 2016. The original article stated the council was considering a U-turn on council tax. In fact in the last financial year the council froze council tax; this financial year it is proposing a rise. These financial calculations are separate – Ed./ 25 January, 2016