Millions of households to face council tax rise of 5% from April

Millions of households face further cost-of-living pressures after research suggested three-quarters of councils will hike tax by 5% from April.

The County Councils Network (CCN) has found 84 councils out of 114 who provide social care and have published their 2023/24 budget proposals plan to raise council tax by 5%.

That is the maximum rise permitted without a vote and would add £100 a year to council tax bills for the average property in Band D.

The Labour vice-chair of CCN, and leader of Cheshire East Council, Sam Corcoran, said local authorities had “little choice” but to propose increasing council tax.

“With inflation reaching levels not seen for over 40 years and with demand-led pressures for care services showing no sign of abating, local authority leaders are setting their budgets in the most difficult circumstances in decades,” Mr Corcoran said.

“We all recognise the cost-of-living crisis is impacting on every household in the country and disproportionally on low incomes, but we have little choice but to propose council tax rises again next year, with many local authorities reluctantly opting for maximum rises.

“With councils facing multi-million funding deficits next year, the alternative to council tax rises would be drastic cuts to frontline services at a time when people at the sharp end of the cost-of-living crisis need us to be there for them. With the financial situation for councils looking extremely tough for the next few years, we will be calling on the chancellor for further help in the March Budget.”

It comes after official analysis recently showed nearly all local authorities were expected to hike council tax by 5% annually over the next five years, under Chancellor Jeremy Hunt’s plans to raise money for them.

Around 95% of councils are expected to hike payments by the full 5% permitted, according to Treasury analysis in November.

But councils warned at the time that rate hikes will be “extremely difficult” for struggling households while failing to plug their shortfalls.

Currently, authorities must hold local referendums if they want to increase council tax by more than 3%, but Mr Hunt announced in his autumn statement he will raise this to 5%.

The Office for Budget Responsibility says this will raise £3.3 billion in 2026/27, rising to £4.8 billion in 2027/28.