Manchester council tax set to rise by 3%: what that means for your bill plus help available for renters

Council tax is set to increase by almost 3% for all residents in Manchester from April - when social housing tenants in the city will also be hit by a 4.1% rise in their rent.

Manchester city council’s executive endorsed the proposal to increase council tax by 2.99 % in the next financial year which will be put to a vote in early March.

It follows two council tax hikes which were approved by Greater Manchester’s leaders in the last couple of weeks, costing Band D homes a further £22 a year.

Manchester councillors also approved a rent increase for all council-owned properties in the city in line with increases by other social housing providers.

Around 70,000 households will be affected by the rent rise – although some of them will have the increase at least partially covered by housing benefits.

A £200,000 hardship fund has been set up to support vulnerable council housing tenants – although the eligibility criteria has not yet been decided.

It comes as Manchester council prepares to set its budget for the next year.

Where the money will be spent

Council leader Bev Craig said there will be no cuts to the budget during the 12-month period – but there is still a ‘huge black hole’ in funding for future years.

She said: “Setting budgets in local government is so dependent on what’s happened in the last 10 years.

“After the £40m that we had to take from our budget last year, to find ourselves in a position through mitigations and the use of one-off funding, to not be making any cuts in this year’s budget, the context of austerity in the last ten years is not just an elephant in the room, but consistently holds back not just our budgets, but budgets across local government more broadly.

In total, £420m has been taken from Manchester council’s budget since 2010 and the local authority’s spending power has fallen by more than 15 %– far exceeding the average for councils in England, according to the town hall.

While next year’s budget will be balanced, the local authority faces a £37m funding gap in the following year and a further £56m gap the year after that.

The council will invest half a million pounds into youth services next year and money has been put aside in the budget to offer free school meals in April.

Each council ward is set to receive £20,000 from the neighbourhoods directorate budget, supplementing funding to support community groups.

All social care workers in the city should be paid the real living wage from April.

And the council has pledged to continue building more housing including low-carbon and affordable homes through a new development arm called This City.

Labour councillor Gavin White, who is the executive members for housing and employment, said the rent increase will go towards retrofitting council homes.

There are more than 15,000 council-owned homes in Manchester of which 12,600 are managed by Northwards and a further 2,500 part of PFI contracts.

Approximately 2,800 households receive full housing benefits which will cover the 4.1 % rise in rent while a further 1,900 will have the increase partly paid for.

Communal heating costs will rise in line with energy price cap, the council says.

All social housing providers in the region are expected to raise rent, meaning around 70,000 households in Manchester will be affected by a similar rise.

A hardship fund of £200,000 has been created to support vulnerable tenants.

What help is out there

Speaking at a scrutiny meeting last week, Coun White said this fund is only for council homes, but housing associations are setting up their own schemes.

He said: “Other registered providers are establishing their own hardship funds to support their own tenants and we welcome that because we know this is going to be a challenge for some residents.”

The financing of the hardship fund has been approved by the council’s executive, but the details of who will be eligible are still being worked out.

A Manchester city council spokesperson said: “Increasing the cost of rents of social housing is never a welcome decision and one that is always taken proportionally against the cost challenge of managing and maintaining social homes against the impact on residents and cost of living.

“This rent increase is set against the backdrop of four years of 1 % reduction in social rents from 2016.

“Over time, this rent reduction has severely affected the council’s housing account and the amount that can be spent on maintaining existing homes and building new social housing – along with crucial investment in fire safety and low carbon retrofitting.

“However, we understand that many of our residents are struggling, not least following the impact of the global pandemic, but also big increases in cost of living.

“To support those that do not receive full housing benefit, we are creating a £200k hardship fund to help those in need.”

The budget – including any increases in council tax – is set to be approved at a full council meeting on 4 March when all councillors will vote on the proposals.