Covid: What is council tax and should it go up in the pandemic?

With households budgets squeezed and many councils warning they're on the brink of bankruptcy dealing with the pandemic, Labour is calling on the government to cancel the planned hike in council tax bills set to kick in from April, in England.

The party says central government should be stepping up and providing extra funds to local authorities rather than leaving them to pass the cost on to families already struggling to make ends meet.

But what exactly is council tax, how much is it and are steeper bills inevitable?

Council tax is a compulsory charge on properties in England, Scotland and Wales set by local authorities to spend as they see fit in providing services in their area.

That means most people, with a few exemptions we'll get on to later, have no choice about paying it. If you're not happy with a service provided, you can't ask for your money back.

Homes are graded into what's known as "bands" or categories, according to how much they are worth at a specific point in time, with more expensive properties facing bigger bills.

The average property in England is in Band D.

Northern Ireland is not covered by the council tax system - it operates a domestic rating system instead.

The matter is devolved in Scotland and Wales, meaning it is overseen by the national governments.

Everything from rubbish collection, street lighting, libraries, police and fire services to youth clubs, parks and recreation facilities.

It's the main source of income for most local councils, although other money goes into the pot from business rates and government grants.

You'll notice an additional charge on your bill, known as the social care precept. This is a separate fee for care homes and other adult social care services.

Many councils have warned that dealing with the impact of coronavirus on top of central government cuts in funding has left big holes in their budgets and drained their reserves.

As a rule of thumb, anyone who is over 18 and owns or rents a home has to pay but there are exemptions and discounts based on individual circumstances.

If you live alone, for example, you're entitled to a 25% discount.

A property occupied solely by students is exempt and you won't get a bill if you're living in halls of residence or a care home.

If you work away from home and your property is empty, you can get a 50% discount.

The key thing to remember is that it is the occupant of the property who is liable for the bill, so tenants rather than the landlord have to pay.

Local authorities in England will be able to increase council tax by up to 5% from April without needing to get approval from local taxpayers. That's 2% on bills for regular council services and an extra 3% for those authorities that provide adult social care.

The government gives the go-ahead for the overall percentage increase and it's up to the local authority to decide if they want to raise bills by this amount.

They don't have to impose any increases but the reality is most have no choice because they are already in financial trouble from lost income during the pandemic and the additional costs of keeping communities safe.

As it is, many have already warned they could be stripped back to providing core services only - to help them balance the books.

Figures from the Institute for Fiscal Studies show councils received 77% less in central government grants per person in 2019-20 than a decade earlier, once inflation had been taken into account.

Labour has called the planned increases "absurd" and says they should be scrapped to ease the pressure on family budgets.

The party argues that now is not the time to hit households with bigger bills.

Labour leader Sir Keir Starmer says those living in a Band D property could see bills rise by an average of £90 a year.

He argues that the prime minister should provide extra funding to councils to plug the gap - rather than offloading the burden to people already worried about their jobs and household budgets.

Communities Secretary Robert Jenrick says councils in England are enjoying a "real terms" increase in funding of 4.4%, once inflation has been taken into account. Government figures show that overall spending on local government rose in 2020-2021 to just over £49bn.

Mr Jenrick told the House of Commons councils in England had access to a £7.2bn pot of money to respond to coronavirus as well as extra funds to provide critical services and adult social care.

He added that councils would "have the resources they need" to serve communities and "deliver first-class public services".

The Local Government Association, which represent councils, said local authorities are facing a "tough choice" because the additional support came with strings attached.

It said: "More than 85% of the potential core funding increase next year is dependent on councils increasing council tax by up to 5% next year.

"This leaves councils facing the tough choice about whether to increase bills to bring in desperately needed funding to protect services at a time when we are acutely aware of the significant burden that could place on some households."