Sheffield residents are facing annual council tax hikes for the next five years – with average households potentially being hit with annual rises of more than £50.
Details of council tax increases up to 3.99 per cent are included in Sheffield Council’s financial strategy for the next five years as it attempts to deal with a £116 million budget black hole.
For Band D households, who currently pay £1,360.48 per year in council tax, rates could rise in the first year by £54.
The council has already cut £352m from its budget since 2010 due to huge Government grant reductions and what it terms unavoidable financial ‘pressures’ linked to increasing costs in providing services such as adult social care.
Rises of 1.99 per cent each year for the next five years are being considered, along with an extra two per cent rise on top to specifically fund social care services.
No final decisions have yet been made, with council tax levels due to be decided by councillors in spring next year as part of the annual budget setting process.
But the council’s new medium-term financial strategy has examined a set of ‘best and worst case scenarios’ relating to future revenue and spending, as well as a ‘base case’ middle ground.
The report by Mike Thomas, interim assistant director at the council, says under council tax for both the ‘best case’ and ‘base case’ scenarios, figures are based on councillors approving ‘a 1.99 per cent increase for each of the next five years’.
In the ‘best case’ scenario for council finances, the authority would also make use of ‘new power to increase council tax up to an additional two per cent through a social care precept’. The report said that increase could also be enforced for each of the next five years, subject to approval by councillors.
The ‘worst-case’ scenario assumes council tax is frozen for the next five years.
The report also states more council tax income could be collected in future due to an increase in the number of houses being built in the city.
In February 2016, the Government set a principle that any local authority wishing to increase council tax by two per cent or more would have to hold a local referendum.
But those with social care responsibilities would be allowed to levy an additional two per cent on top of this, as long as they could guarantee that extra income was spent only in that area.
Any plans for further council tax rises next year are dependant on what figure the Government sets for the maximum tax increase before a referendum is required.
Mr Thomas said: “One of the key risks is around the referendum trigger set by Central Government, which will not be confirmed until February 2017. If the trigger was reduced from two per cent to one per cent, this would limit the council’s ability to generate additional income by circa £1.7m.
“It will be for the council to decide the policy regarding future council tax increases.”
The potential rise follows council tax increasing by 3.99 per cent earlier this year, which took Band D rates to £1,360.48.
A council spokesman said: “It is important to be clear that no budget decisions have been made.
“Decisions on council tax are made by full council annually as part of the budget setting process.
“The next stage is for us to go out and ask people in Sheffield what they think in a consultation we will be launching in November.”