Council Tax set to rise by 4.99% as council faces long-term Covid-19 cost pressures on its budget

Full Council has approved the 2021/22 budget today (12 February 2021). This includes the setting of Herefordshire Council tax rates which will come into effect from April 2021.

The final budget takes into account the 2021/22 final local government finance settlement announced by central government. This includes:

  • A new ‘Lower Tier’ Services Grant of £0.25m
  • Revenue Support Grant funding of £0.6m
  • New Homes Bonus funding of £1.7m
  • Rural Services Delivery Grant of £5.3m

The council is continuing to face long-term Covid-19 cost pressures on its budget. The council has looked first to find savings within its core activities to offset these costs. This has resulted in £11.2m in savings being identified across the council’s services – the largest one-year saving this council has ever had to make.

Councillor Liz Harvey, Cabinet Member for Finance and Corporate Services, said:

“2020 didn’t turn out the way any of us expected, and none of us anticipated the impact the Covid-19 pandemic would have on us nationally and locally. The council’s 2021 budget has to address a shortfall of £15.1m in a base budget of £157m – that’s almost 10% savings in-year – whilst continuing to deliver on core and statutory public services.

“We have managed to identify more than £11m of internal savings, but following consultation with the public and stakeholders, we do need to set a 4.99% Council Tax increase to bridge the funding gap.

“We are mindful that this is a very challenging time for everyone, so alongside this tax rise we have also increased the Council Tax discount scheme to 100%, for those that qualify, and we are providing £1.9m to fund this alongside the council’s local assistance fund for others experiencing financial hardship.”

Council Tax funds around 29% of the council’s budget. A 4.99% total increase to Council Tax has been recommended. This is an equivalent rise of £1.51 a week for a Band D property. The increase is made from a 3% increase to the ‘adult social care precept’ and 1.99% increase to ‘core Council Tax’. In total this will provide £3.2m towards the cost of council services.

Residents on a low income may be eligible for help to pay their bill through the Council Tax Reduction scheme. Some residents will continue to pay no Council Tax at all, such as young adults who have left care and, with effect from 2021, also all the council’s Foster Carer families.

More information and advice on Council Tax reduction schemes and allowances