Will you pay more council tax to fund the North? Use our tool to find out
Households across southern England that pay less than £2,000 a year in council tax are facing an increase in their bills to fund the North.
Angela Rayner is cutting the amount of central government funding that local authorities which set low bills will receive.
The Tories accused the Deputy Prime Minister of 'punishing' these councils and putting them under pressure to either cut services or increase council tax to cover the funding shortfall.
The changes could lead to bills rising across southern England to enable more money to be sent to northern cities.
About half of council income comes from central government, and Labour claims that the way it is shared between councils is unfair.
There are 13 councils that charge less than £2,000 a year in council tax, all of them in London.
However, town halls can only put up council tax by a maximum of 5 per cent unless a local referendum approves a higher rate, or the Government gives them permission to do so.
The plans for what Ms Rayner believes is a 'progressive' redistribution were unveiled in a consultation document published on Friday.
It will change the way that central government grants are shared out, based on calculations of what local authorities could raise if all areas charged the same rates of council tax based on their housing mix.
The document states: 'The Government is proposing to set a notional council tax level that achieves the objective of full equalisation.
'To fully equalise against the council tax base, we set the notional council tax level at the average Band D level of council tax in England in scope of these reforms (c£2,000 in 2026-27).'
The Government will also introduce a new formula for accounting central government funding based on local needs, including population, poverty and age.
Ms Rayner believes it is unfair that people living in the North often pay hundreds of pounds more in council tax than those in southern areas.
For example, a three-bedroom semi-detached home in Hartlepool generates a council tax bill higher than a 10-bedroom home in Westminster valued at £80 million.
The combination of the two changes will mean steep falls in grant income for wealthier councils, mainly in London and the South East, forcing them to either raise council tax rates to make up the shortfall or cut public services.
Ms Rayner also unveiled changes to council tax collection to stamp out 'unacceptable, aggressive' practices.
To help households manage their finances, she proposes to change council tax billing from 10 months to 12 months.
Council tax bills tend to be paid through 10 instalments (from April to January) and the majority of the 25 million council tax bills issued each year in England are paid by this method.
But 12 month instalments could help households to spread the cost of their bills over a longer period.
The Government is also looking at enforcement processes, including 'a more appropriate and proportionate time frame' before councils can demand a full bill from households.
When someone fails to pay council tax, a reminder can be sent seven days after a missed payment. Following that, if the bill remains unpaid seven days after the reminder notice has been issued, the full amount due for the year becomes payable.
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