The recent Spending Review has set the stage for a projected rise in council tax across England, with a forecasted increase of 5% each year aimed at bolstering local services, primarily policing. Council tax, a crucial revenue stream for local authorities, is expected to be pushed to its maximum allowable rate without the need for consent from the central government. This anticipated rise ties directly to the broader narrative of fiscal management and public service funding in the United Kingdom.
Local authorities hold the authority to impose annual tax increases of up to 4.99%. However, many councils have opted for lower increments in previous years. This shift in strategy is underscored by the government’s current assumption that all councils will take advantage of the maximum increase allowed. This is part of the government’s wider calculations suggesting a real-term increase in the average “police spending power” of approximately 2.3% each year—a development critiqued by various stakeholders.
In the intricacies of local government finance, the council tax includes a specific levy known as the police precept. This precept directly contributes to the funding of essential services like community policing. The police budget is a composite of funding that stems from both central and local government sources; thus, the rise in council tax directly impacts police operational budgets, as senior officials have been vocal about the pressing need for enhanced funding. Despite additional income stream projections, there is concern that if extra funding is allocated, much of it will inevitably be requisitioned for covering officer salaries rather than improving services.
Chancellor Rachel Reeves has addressed the implications of the 5% cap and the choices available to local councils. While confirming that councils are permitted to increase council tax to the cap, she emphasized that they are not obligated to do so. This rationale seeks to balance investments across social care, policing, and other essential local services. The stark reality confronting local councils is underscored by a 1.4% real-terms reduction in the budget of the Ministry of Housing, Communities and Local Government as noted in the Spending Review. Despite this budgetary strain, the government contends that councils can bolster their “core spending power” by adopting the maximum council tax increase.
Local services encompassing social care, library operations, waste collection, and street maintenance heavily rely on council tax revenue. The recent settlement proposed an additional £3.3 billion of real-term grant funding to local authorities during the period leading up to 2028-29. When coupled with a 3% core council tax referendum principle and a dedicated 2% precept for adult social care, the expected overall inflation-adjusted increase in core spending by local authorities culminates in an average annual growth rate of 3.1% between 2023-24 and 2028-29.
Louise Gittins, chair of the Local Government Association, expressed mixed feelings about the Spending Review. While acknowledging aspects that would lighten the burden on councils—like support for children’s services and funding for affordable housing—she insisted that council finances are still under rampant pressure. This dire situation means that many councils may have no choice but to impose significant tax increases while simultaneously contemplating cutbacks in services.
The sentiments of Tiff Lynch, acting chair of the Police Federation for England and Wales, further signal the challenges lurking in these developments. She critiqued the Spending Review as an opportunity squandered after more than a decade of austerity that has severely weakened policing and its workforce. The looming cuts pose an alarming proposition for public safety, with the community ultimately bearing the consequences.
In summary, the anticipated increase in council tax is a multifaceted issue interwoven with the pressing demands of local governmental finance, public service efficacy, and the persistent financial constraints faced by councils across the UK. Local services, police funding, and the administrative choices of councils will set the course in a fiscal landscape marked by both necessity and obligation to serve the public effectively.
