Millions to See Council Tax Increase Exceeding 5%

Millions to See Council Tax Increase Exceeding 5%.

Millions of households in England are confronting council tax increases that exceed the standard limit, following the government's decision to permit six regions to circumvent the 5% cap on such hikes.

Typically, local authorities responsible for social care can raise council tax annually by a maximum of 4.99% without requiring a referendum, while other councils are limited to a 2.99% increase.

However, Deputy Prime Minister Angela Rayner has announced that Bradford Council will be permitted to implement a 10% increase, while Newham and Windsor and Maidenhead will both be allowed to raise their rates by 9%. Additionally, Birmingham, Somerset, and Trafford will be able to increase their charges by 7.5%.

Rayner said the increases were crucial to "prevent these councils falling further into financial distress".

She said: "We recognise the importance of limited increases in helping to prevent these councils falling further into financial distress – but we have been clear this must be balanced with the interests of taxpayers."

The government has prohibited several councils, including Hampshire, from increasing taxes beyond 4.99%, despite Hampshire's request for a 15% rise.

A statement regarding local government funding also indicated that councils will have access to over £69 billion this year, reflecting a 6.8% increase in cash terms compared to the fiscal year 2024-25.

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This agreement ensures that no council will experience a decrease in core spending power.

Of this total, more than £2 billion will be derived from direct grant funding, in addition to the revenue generated from council tax.

Furthermore, the announcement confirmed that councils will receive additional funds to address the rising costs associated with employer National Insurance contributions.

This supplementary funding for the upcoming year amounts to approximately £2 billion, in addition to the £1.3 billion previously announced in the October Budget.

Specific funding allocations for mayoral combined authorities continue to be non-existent, indicating that they are anticipated to secure financial resources through alternative methods.

Louise Gittins, chair of the Local Government Association, stated that the financial situation for councils remains "extremely challenging," and the additional funding for the upcoming year "still falls short of what is desperately needed."

She said: "This financial year therefore remains extremely challenging for councils of all types who now face having to increase council tax bills to bring in desperately needed funding next year yet could still be forced to make further cuts to services".

She called for a "more sustainable future funding system" as well as "significant and sustained increases in overall funding" for councils in the upcoming spending review.

If council tax is increasing beyond the usual limits, it is essential that the additional revenue is spent effectively and transparently. Households facing higher bills deserve to see real improvements in local services, from social care to infrastructure. Without clear accountability, these hikes risk deepening public frustration rather than addressing financial shortfalls.

Councils must prioritize essential services, ensure efficient spending, and communicate how funds are being used. A long-term solution, including sustainable government funding, is also needed to prevent recurring financial crises. Simply raising taxes without improving outcomes will only erode trust in local government and its decision-making.