Gedling Borough Council‘s deputy leader Michael Payne has warned that hardworking families will be ‘hit hard’ by the latest budget and questioned the Chancellor’s Spending Review funding for local government.

Rishi Sunak announced a three-year, £4.8 billion package to increase local authorities’ spending power by the end of the current parliament, viewed as a “move in the right direction” by some councillors.

It will spread an additional £1.6 billion a year across councils between 2022 and 2025, used to shore up services and provide a three per cent boost after more than a decade of cuts.

It comes alongside the new Health and Social Care Levy, gained through a ringfenced 1.5 per cent National Insurance rise next spring.

For someone earning £30,000 a year, this rise will mean paying an additional £255 each year to specifically fund social care reforms.

The Government hopes the levy will allow councils to “continue to provide other local services” without relying on the existing social care council tax precept. This was introduced to support authorities funding the service.

In 2021/22, the precept equates to almost 10 per cent of Nottinghamshire County Council’s council tax bill – or £149.64 out of £1,580.85 for a Band D property.

This total does not factor in the precepts charged by district and borough councils, the fire authority and the Police and Crime Commissioner.

In total, the average Band D property in Nottinghamshire is paying £2,120.72 throughout 2021/22, Government figures show. This was £2,226 in Nottingham City.

But independent analysis by the Office for Budget Responsibility (OBR), the Government body which monitored Rishi Sunak’s plans prior to his Spending Review, expects precepts to hike further in the coming years.

The OBR’s report, published on Wednesday, suggests council tax receipts could rise by £2.2 billion nationwide by 2025 compared with 2019/20.

This, the OBR says, will be the result of authorities being allowed to further increase the social care precept by one per cent each year for the coming three years. Last year, councils were allowed to raise it by about almost three per cent.

Authorities will also be allowed to raise their standard precepts by a further two per cent until 2025, while Police and Crime Commissioners can raise annual bills by £10 per household, Budget documents reveal.

By 2026/27, the OBR predicts council tax nationwide could rise by 33 per cent to £12.1 billion compared with 2019/20, when estimated nationwide receipts were about £9.1 billion.

It means that, under the OBR assessment, council tax receipts nationwide could rise by about 24 per cent between 2019/20 and 2025.

Using Nottinghamshire averages for a Band D property in 2019/20, it means residents paying as much as £2,454.90 in 2025 compared with the £1,976.85 average two years ago.

In Nottingham City, precepts could reach about £2,530.83 in 2025, compared with the £2,038 bill in 2019/20.

It comes at a time when fuel, energy and supermarket prices are on the rise, and alongside the increase in National Insurance from April.

Petrol and diesel prices are currently at their highest rate since 2012, while millions of households are being urged not to swap energy providers after wholesale prices doubled in the past year.

The OBR is also forecasting inflation to average at about four per cent over the next year, more than the boost on offer to local authorities in the Spending Review.

Councillor Michael Payne (Lab), deputy leader of Gedling Borough Council, believes this will all “hit people hard”.

He told the Local Democracy Reporting Service: “I didn’t hear anything in the budget that will alleviate the pressure on normal people.

“For me, it’s almost as much about what the Chancellor didn’t say than what he did. What he didn’t say is they’re going to force council tax up through both the standard and the social care precepts.

“This is on top of food prices going up, national insurance going up, energy prices going up and fuel prices going up.

“The Budget might sound really good, but at the end of the day, it’ll be paid for by hardworking families who are already feeling the squeeze. It’ll be the highest tax burden [as a percentage of GDP] since 1949.”

Concerns have also been raised by Cllr Jason Zadrozny (Ash Ind), leader of Ashfield District Council, who warned of raised council tax precepts next year despite welcoming the £4.8 billion boost.

He told the Local Democracy Reporting Service: “After 11 years of drastic cuts to councils like Ashfield and Nottinghamshire, this local government funding will still leave spending dramatically lower than 2010.

“The Chancellor announced he has increased spending on local government by the biggest amount in a decade – it’s an incredibly low bar.

“We’ve suffered austerity and cuts, year-on-year, by the Conservatives.”

He added: “This is a move in the right direction, but councils will continue to be on life support as you can’t overturn a decade of austerity by increasing spending by less than inflation.

“This may still lead to council tax increases.”

However, Cllr Ben Bradley MP (Con), leader of the county council and Mansfield MP, welcomed the budget and said it’s too early to tell what the announcement means for councils’ finances.

He said: “We don’t know what [this] means yet in practical terms or what it will look like, but I hope it will help us boost public services and balance the books at the county council.”

Speaking in the Commons on Wednesday, Chancellor Rishi Sunak added: “As well as funding to deliver the Prime Minister’s historic reforms to social care, we’re providing local government with new grant funding over the next three years of £4.8 billion.

“[This is] the largest increase in core funding for over a decade.”

The Chancellor also announced an extra £4.7 billion for schools by 2024/2025 and a cash increase for every child of £1,500.

This will bring education funding for local authorities back to around the 2010 levels over the next three years but does not cover the nine per cent fall in funding since 2009.

A Local Government Settlement, expected in the coming months, will likely provide further information on the future funding of local councils.

It is one of the first tasks of new local government secretary Michael Gove, who took over from Newark MP Robert Jenrick in the summer.

At present, local authority budgets are made up of slightly more than 30 per cent in Government grants and slightly more than 50 per cent is from council tax precepts.

The remainder is from retained business rates and borrowing.

But the Government anticipates that, overall, the annual £1.6 billion increase will raise councils’ core spending power by three per cent and prevent cuts to services.

This, a Treasury spokesperson says, represents the “largest increase in core funding in over a decade” following “real-terms year-on-year increases since 2019”.