How much will council tax increase in different places?

A bigger hit for poorer places

Yesterday Kemi Badenoch challenged Keir Starmer about whether he would keep the cap on Council Tax.

Though he didn’t answer in the Chamber, during the course of the afternoon Number 10 were forced to say that they would increase the cap on council tax by 5%¹. This information would normally come out in December in the Provisional Local Government Finance Settlement, so her question has forced the pace.

Ministers were then called back to the Chamber for an urgent question this morning, during which Matt Pennycook confirmed on the record that the planned increase in council tax would raise additional £1.8 billion next year. He suggested council tax would increase by a 3% core increase, plus an additional 2% for local authorities with adult social care responsibilities. These top tier authorities are where most of your bill comes from, so the average is close to 5%.

This is all a long way away from where Labour were before the General Election. Last year Keir Starmer was promising to freeze council tax. For many years Labour have campaigned for a freeze at the local level - indeed in 2019 they were arguing for council tax to be abolished.

Council tax varies a lot between different places. So how much will the proposed increase cost you?

How much will it cost?

We can find out from Council Tax statistics how much residents in England are charged in each place, and how that bill breaks down between unitary authorities, upper and lower tier authorities, fire and police authorities, metro city authorities like the GLA and MCAs, and even parish councils.

The analysis below comes with some caveats:

• We don’t yet have the full picture that we will get in the Local Government Finance Settlement. The increases for city governments and fire and police are normally different to the rate of increase for local authorities. For some authorities there is a cash rather than percentage increase - e.g. the Mayor of London requested a £20 increase last year (equivalent to 8.6%). Districts often get “X% or a £Y, whichever is higher.”

• Not all of the MCAs can or do raise a precept.

• Not all authorities will actually take up the full amount. That said, last year the overwhelming majority did, and they probably will again.

So here is a rough estimate of how much extra people in different places will be paying. This is what the increase would be if we assume fire, police, MCA and GLA also get a 5% increase when the settlement comes out. (I have excluded Parish precepts).

If you hover over it you can see the impact on each band as well as the Band D properties - the pop out sections are our large cities.

Thanks to the quirks of the Council Tax system, the likely £97.50 increase for the King in his Band H property (Buckingham Palace) is similar to the increase facing someone in a Band B property in Liverpool (£94.13) - and a lot lower than someone in a Band D property in County Durham (£121.56).

These gaps between richer and poorer places are even bigger if we look at the increase as a share of average earnings. Broadly speaking the increase for a Band D property will be a larger share of average earnings in poorer places.

I understand why the Government are doing this, but we certainly have come quite a long way from Labour’s promises to freeze (2023) or abolish (2019) Council Tax.

Appendix

Here is a chart based on ONLY including what Matt Pennycook has already said: 5% for unitary and upper tier authorities, 3% for shire districts. Shire districts are generally about 10% of the combined total of county and districts, so the average increase in two tier areas will be a bit lower - more like 4.8% ish. This chart effectively assumes all the other authorities Matt Pennycook didn’t mention are frozen.

1. Technically the referendum threshold.