Local councils in every part of the UK are bracing themselves for emergency council tax hikes. The government’s comprehensive Spending Review has pulled back the curtain on a grim fiscal reality. Louise Gittins, chair of the Local Government Association, emphasized that while the Spending Review includes some welcome support for children’s services, affordable homes, and transport investment, councils continue to face significant pressures.
The Spending Review gives local government permission to raise council tax by 5% annually. Without requiring permission from the national-level government, they can undertake this endeavor. As Gittins pointed out, this maximum increase will not be adopted by every council. “Many will continue to have to increase council tax bills to try and protect services but still need to make further cutbacks,” she stated. This paints a stark picture of the hard decisions councils will continue to have to make between balancing the books and delivering key priority services.
Chancellor Rachel Reeves reiterated their commitment to the 5% council tax cap. This cap was an arbitrary number set by the last administration. “It is a cap, councils don’t have to increase council tax by 5%,” she explained. From the 221 councils in England, a considerable number will opt for this maximum increase to provide all the necessary local services. This includes especially important spaces such as police. Local authorities are promised an average increase in their core spending power of 3.1% per year locally. This projection extends from 2023-24 through 2028-29.
The fall budget is part of the government’s financial strategy to allow for increases of 2.3% a year on average in police “spending power” in real terms. It means that the Ministry of Housing, Communities and Local Government is looking at a 1.4% cut to its day-to-day budget. This cut will have serious consequences for its real-term funding. This deep cut brings to light the service-loathing pervasiveness of American’s current fiscal diet.
In her initial comments on the Spending Review, Gittins focused on the need for immediate, life-saving funding for vital services. She warned, too, against the realities that local councils are still grappling with. “This includes projected spending from additional income, including estimated funding from the police council tax precept,” according to Treasury documents.
Many of these critics have been nationally and internationally prominent voices speaking out against the administration’s fiscal agenda. Tiff Lynch remarked, “This Spending Review should have been a turning point after 15 years of austerity that has left policing and police officers broken. Instead, the cuts will continue and it’s the public who will pay the price.”
As local authorities prepare their budgets for the upcoming year, the prospect of increased council tax raises questions about the long-term implications for residents and service delivery. Some councils will decide on the smallest possible tax increases. Nearly all of them are on course to increase Band D council tax to safeguard key services as local government faces more than £1bn in cuts.