News 20 February 2024

Nearly all UK councils set to raise council tax by maximum amount

20 February 2024

A recent analysis reveals that the vast majority of councils are gearing up to hike council tax rates to the maximum allowable extent, reflecting the deepening crisis in local authority funding.

According to data from the County Councils Network (CCN), nearly all but eight of the 136 top-tier councils surveyed intend to implement council tax increases of at least 4.99 per cent come April.

Additionally, four councils – Birmingham, Woking, Slough and Thurrock – recently granted special dispensation by the government due to their financial distress, are permitted to raise taxes by up to 10 per cent. Thurrock has opted for a 7.99 per cent increase, while Birmingham, Woking and Slough are yet to finalise their plans.

This surge in councils seeking maximum tax hikes represents a sharp uptick from previous years, with 95 per cent of councils now aiming for the highest increase, compared to 75 per cent in the previous period.

The proposed hikes translate to an average rise of £103 for households in Band D, a significant burden amid ongoing economic challenges.

Council leaders attribute these decisions to mounting financial pressures, despite a recent injection of £600 million by the government. Nevertheless, local authorities continue to grapple with funding shortfalls, with eight councils declaring bankruptcy in the past six years.

Sam Corcoran, Labour leader of Cheshire East Council and CCN vice-chair, said, “No council leader takes the decision to raise council tax lightly as we know this will add to the cost of living for residents, but councils have had little choice but to put up council tax due to the increased demands, particularly in children’s services.

“The next government must set out a long-term funding plan for councils while also undertaking a comprehensive reform programme to help drive down costs, especially for children’s services and home-to-school transport.”

Despite the additional funding, CCN councils are still confronted with a collective funding gap of £1.1 billion over the next two years.

Some councils plan to offset the impact on residents by offering support to low-income households. The CCN advocates for broader reforms, including revisions to the legislative framework for school transport and reductions in fees charged by private providers in the children’s social care sector.

Responding to concerns, a government spokesperson said, “Councils are responsible for their own finances and set council tax levels, but we have been clear they should be mindful of cost-of-living pressures. We continue to protect taxpayers from excessive council tax increases through referendum principles.”

[Image created via MidJourney]