Will a 10% tax hike help tackle soaring debts?

Yahoo

06-03-2025

Bradford Council will vote later on raising council tax by 9.9% as it faces rising costs and debts which are expected to reach £1bn by 2030.
It will also consider cuts worth £42m in the next financial year.
The BBC examines the reasons behind the council's fiscal woes.
The council's borrowing has been prompted by a drop in government funding which it says has seen £350m cut from its budget since 2010/11.
Last year, the authority was granted government permission to borrow more, and sell off more of its surplus land and buildings, to keep essential services running and avoid effective bankruptcy.
That emergency borrowing is predicted to grow considerably as the graph below shows.
A report by the council's senior finance officer also states that rising debts will see the authority owe in excess of £1bn by 2030, rising from less than £400m in 2021/22.
Most of the current debt relates to capital projects, schemes such as Bradford Live and One City Park, which have been funded through government grants, loans, or a combination of the two.
The report states that it is increasingly relying on borrowing to run core services and 20p in every £1 will ultimately go towards debt repayment in future.
The costs of running services is also increasing, especially in children's services.
Despite being removed from direct council control and placed under an independent trust, its costs continue to spiral..
Bradford is one of several English councils with debts exceeding or likely to exceed £1bn.
Birmingham City Council owes almost £3bn, and others such as Woking, Croydon and Spelthorne have similar debts.
Having a large debt is itself not an indication of financial troubles - as larger authorities will inevitably have larger borrowing needs - but in many recent cases, debts have posed serious problems.
Across the country, the picture for council finances has been dire for several years, leading to the government announcing a major shake-up of how local authorities are run.
Jonathan Carr-West, chief executive of the Local Government Information Unit, said its State of Local Government Finance report laid bare what he said was the "dire situation facing councils across England".
"It is no surprise that councils are having to pull all levers to balance their books," he said.
"This underlines a fundamentally flawed system for funding local government and one that needs to be radically reformed if we want to avoid an endless cycle of crisis management moving forward."
If the 9.99% council tax rise is approved later, an average Band D household in Bradford will face a rise of £170 this year.
Other authorities in West Yorkshire plan to raise theirs but only by the normal maximum of 4.99%.
Leeds' Band D bills are set to rise by £86 a year and Kirklees by £93. The annual increase will be £85 in Wakefield and £108 for Band D households in Calderdale.
Bradford was one of six councils granted permission by the government earlier in the year to propose council tax rises above the usual maximum of 4.99%.
The proposed rise has led to a series of protests and political opponents have also argued the hike could have been avoided.
Bradford University student Taz Chowdhury, 21, was at one of the protests and said considering a 10% tax rise in one of the country's poorest cities was "egregious".
"I don't think it's appropriate or acceptable, and we have to fight back," she said.
Maureen Gorst and Jjeneen Sherrington were also among those demonstrating.
They said public services were "failing" and "broken" and rising living costs were a worry for everyone.
"I am 66, I retired a year ago, and I still have to have two jobs to manage," Ms Gorst said.
Ms Sherrington questioned the appropriateness of spending on public art and UK City of Culture in the current economic climate.
"I can't afford it," she added of the 10% council tax rise.
Sarah Siree also joined a protest with her 10-year-old son and said she was already struggling as a single parent.
"There's nothing left at the end of the month. Where do they think people are going to get this extra money from?"
Labour council leader Susan Hinchcliffe said reducing reliance on borrowing was at the heart of the authority's financial recovery plans.
She said increasing the council tax to 9. 99% as a one-off would actually help "make sure that we save the council taxpayers £111m worth of borrowing over the next 20 years".
"We're already trying to reduce that borrowing to make it more manageable, not just for now, not just for next year, but for our children and our grandchildren," she said.
She said the tax made a "huge contribution" and the council was between a "rock and a hard place".
"We don't want to do this increase in council tax, but we know it's the right thing to do, not just for now, but for the future."
Listen to highlights from West Yorkshire on BBC Sounds, catch up with the latest episode of Look North.
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Bradford Council