Council tax bills could potentially increase by more than £100 on average next year as Labour has decided to maintain the cap, allowing for a maximum rise of 4.99 percent. This news comes as households are already facing financial challenges due to the economic impact of the pandemic.
The decision to allow for such an increase means that the average band D annual council tax bill could see a £109 rise, bringing it to £2,280. For those in the most expensive band (H), the increase could be even higher at an average of £217.
The reasoning behind this increase is to provide additional funding for local councils, with the potential to raise an extra £1.8 billion in 2025/26. Many councils are currently struggling financially, with one in four reporting that they may need emergency support to avoid bankruptcy in the next two years.
While the current inflation rate stands at 1.7 percent, the proposed council tax increase is significantly higher at 4.99 percent. This could put additional strain on households already facing rising costs of living.
It is expected that the majority of local authorities will opt to raise council tax by the full 4.99 percent in 2025, following the trend of 95 percent of eligible councils doing so this year. This could mean that residents across the country will be facing higher tax bills in the coming year.
The issue of council tax has been a contentious one, with some councils being granted special permission to increase rates beyond the cap. Birmingham City Council, for example, opted for a 10 percent rise this year and plans to do the same again in 2025, resulting in a 21 percent increase for residents over two years.
During Prime Minister’s Questions, Sir Keir Starmer attributed the financial struggles of local authorities to the Conservatives, calling the situation “absolutely catastrophic.” The upcoming release of the annual local governance finance settlement in December will reveal how much additional funding central government will provide to support cash-strapped councils.
As households brace themselves for the potential increase in council tax bills, it is clear that the financial burden on residents is only set to grow. The decisions made by local authorities and the government in the coming months will have a significant impact on the lives of millions across the country.
