True cost of spending review - council tax to rise ?

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Council tax bills could rise to help fund social care under sweeping changes to the way local authorities are funded.

The council will be allowed to add two per cent to council tax bills to go directly to care services - but the extra cash will fail to plug a growing funding shortfall.

The “social care” precept could see Wakefield council tax bills rise by four per cent in future years - an increase of 60p per week for a Band A property and 90p for a Band D home.

The council tax move was announced by chancellor George Osborne, who claimed that more fundraising powers would help local authorities pay for social care.

But Wakefield Council said the move would raise just £2.1m a year - 1.5 per cent of the annual social care budget - when demand on services was increasing at a rate of five per cent every year.

Council leader Peter Box said: “That’s the problem we have got. There’s going to be a 3.5 per cent shortfall. The reason I’m disappointed is that puts a sticking plaster on a gaping wound.

“The fact is our budget for social care is £141m and demand is increasing year on year.

“We have got a population that is getting older. People are living longer and the biggest growth is over 85s.

“Why don’t the government fund this nationally?”

Mr Osborne’s autumn budget statement effectively made councils self-sufficient by scrapping central government grant funding over the next four years in favour of local fundraising powers.

Wakefield Council expects to be facing a £30m budget shortfall next year. Coun Box said: “About a third of that is going to come directly from some of the services to the public. It’s too early to go into detail.”

Town halls will be able to keep all the proceeds from taxes on business - and have the power to cut business rates.

Critics of the move fear councils could undercut each other in a “race to the bottom” to attract companies.

Concerns have also been raised that councils which border on bigger local authority areas like Leeds could lose funding.

Wakefield Council said it currently retained £59m from business rates, a figure which includes a £7m “top-up grant”.

Mr Osborne wants local authorities to sell off their assets to pay for the cost of running services.

Town halls were previously only allowed to use the proceeds of asset sales to buy new assets - not run services.

And in an attempt to boost the housing market, he announced that first-time buyers would be offered 20 per cent of the cost of new-build “starter homes”.

The move set alarm bells ringing in some town halls over fears the house price cut will come from funds currently raised by local authorities to pay for new roads and community facilities around housing estates.

Coun Box said Wakefield would get confirmation of its budget for next year later this month.

He said: “I’m hoping that we can present a budget next year that will look at every single efficiency possible that can be made.

“We’ll look at how we can be more commercial.

“We will make sure that cuts to frontline services are kept to an absolute minimum.

“I can give the people of the district a guarantee that’s what we’ll do.”