Rachel Reeves has been told to let local authorities launch a tax raid on millions of pensioners and others who live alone to help plug a predicted £54bn black hole in council finances.
The County Councils Network (CCN), which represents England’s biggest councils, has urged the Chancellor to hand local authorities the power to scrap the single-persons council tax discount in their area.
People who live on their own currently enjoy a 25pc discount on their council tax bills, worth around £543 this year on an average band D property.
The benefit is enjoyed by 8.4m people, including roughly 4m pensioners. Many are likely to live alone because their partners have died.
While the Chancellor has explicitly ruled out scrapping the tax break at a national level, Whitehall sources indicated that this does not include devolving the power to local councils. A Treasury spokesman refused to rule out such a move.
The Institute for Fiscal Studies (IFS) has calculated that abolishing the break would raise around £3bn.
Six in 10 councils risk being pushed into bankruptcy by the end of this parliament owing to massive demand for care services and from parents of children with special needs, according to the CCN.
A collapse would impact services delivered to over 16m residents in England, it warned.
Councils with social care duties can raise council tax every year by up to 4.99pc without holding a referendum. Others can increase it by up to 2.99pc.
The CCN warned that even if all English authorities increased council tax by the maximum of 3pc a year, councils would still face a cumulative budget shortfall of £16.4bn over the next five years.
The CCN said the deficit was being fuelled by rising demand and costs in “just three service areas: adult social care, children’s services, and home to school transport”, accounting for 83pc of the total increase in projected council costs by 2030.
Giving councils more tax raising powers including “more flexibility in areas such as the single person discount and ability to propose additional council tax bands” would help to bridge the gap further, they said.
A failure to address the £54bn funding black hole could leave councils as “little more than care authorities” as they scramble to avoid bankruptcy, the CCN warned.
Its survey of council chief executives suggested that 16 authorities “could be at risk of declaring bankruptcy by 2026-27”, with “a further six the year after, if government does not provide extra funding and councils statutory responsibilities remain the same.”
The CCN called for urgent reforms linked to special needs provision for children with autism and ADHD, where spending is quickly spiralling out of control.
The cost of supporting school children with special needs has jumped by more than two-thirds since lockdown amid a surge in pupils with autism.
Local authority spending on children with special educational needs and disabilities (SEND) has risen by 70pc since 2018-19, from £6.9bn to £12bn, according to Telegraph analysis of Department for Education planned spending.
Barry Lewis, vice-chair of the County Councils Network, said: “With the funding gap fuelled by rising costs in adult social care, children’s services and SEND transport, councils will have to divert even more funding to prop up these services, leaving councils providing little more than care services by the end of this parliament.
“Ministers would therefore have no choice but to radically rethink the statutory responsibilities placed upon councils to prevent six in 10 declaring bankruptcy by 2028”.
A Treasury spokesman said: “We do not comment on Budget speculation.”
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