New analysis by the economic think-tank warned that if council tax continues to rise with inflation – currently at 2 per cent a year – there will be a countrywide shortfall of 4 billion by the end of the next parliament.
And the growing elderly population means the deficit will rise to 18 billion a year by the 2030s, the IFS warns.
A new report published today (MON) suggests that councils should be allowed to raise additional funding through a local income tax of 1p on the 1, as an addition to national income tax. The move would raise 6 billion a year for councils, the IFS calculates.
Councils would then have a choice on whether to raise taxes or cut services, the think tank said.
Report author David Phillips, Associate Director at the IFS said: Councils will rely on council tax and business rates for more of their funding going forwards.
And those revenues just dont look like they will keep pace with the rising costs of services like adult social care even with council tax bills going up at 4 per cert a year, which is double the rate of inflation.
That means finding billions more in funding to top up existing local tax revenues, even before thinking about new initiatives like free personal care.
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