Local governments have warned of higher council taxes following the government announcing its provisional funding package for councils in the year 2024–25.
Levelling Up Secretary Michael Gove said the £64 billion settlement represents an above-inflation 6.5 percent increase on the current financial year.
Councillor Shaun Davies, Labour Chair of the Local Government Association (LGA), said the uplift “assumes that all councils will increase their council tax bills by the maximum allowed.”
Conservative Councillor Barry Lewis, finance spokesperson and vice-chairman of the County Councils Network (CCN), also said the settlement will be “bitterly disappointing for England’s county authorities.”
It comes after the two bodies representing councils in England said a significant proportion of councils are at risk of effective bankruptcy.
Councils have been lobbying the government to further increase the funding, but Westminster pressed ahead with the £64 billion package.
In a written statement, Mr. Gove said the government recognises the challenges councils are facing, “and that is why we have announced a £64 billion funding package to ensure they can continue making a difference, including through our combined efforts to level up,” he said.
In maintaining the minimum core spending power uplift of 3 percent before decisions are made on council tax increases, Mr. Gove said this showed the government recognises “pressures still exist for all local authorities.”
As in previous years, council tax rises will be capped at 3 percent for upper-tier councils, with an option to apply an additional 2 percent precept for social care.
However, Mr. Gove said “in consideration of significant financial failure,” Thurrock Council, Slough Borough Council, and Woking Borough Council will be handed “bespoke” referendum principles.
Thurrock and Slough will have a core council tax threshold of 8 percent, while Woking will be able to increase bills by 10 percent, without holding a referendum.
Thurrock, Slough, and Woking are among the nine councils that have issued section 114 notices since 2018, meaning they had to halt all non-essential spending because they were unable to balance the books.
According to the LGA, almost 20 percent of council leaders believe they may get into the same situation this year or next year.
Responding to the provisional settlement, Mr. Davies said councils are “again left facing the difficult choice about raising bills to bring in desperately needed funding.”
“Today’s settlement does not provide enough funding to meet the severe cost and demand pressures which have left councils of all political colours and types warning of the serious challenges they face to set balanced budgets next year,” he said.
“Councils in England continue to face a funding gap of £4 billion over the next two years as today’s announcement does not change the funding gap facing councils this year and next.”
He said it’s “unthinkable” that the government hasn’t provided more funding, adding that local services would be “exposed to further cuts.”
Mr. Lewis said councils “will have no choice but to implement more severe reductions to services and to levy higher council tax rises. This will undoubtedly be a double whammy for residents during a cost of living crisis, while an increasing number of local authorities will struggle to deliver a balanced budget next year.
“We know that government finances are tight, but there is a value in investing in public services, so we will now be making our case to county MPs ahead of the parliamentary vote on the final local government settlement to ensure that they are aware of the extent to which highly valued local services will have to be cut next year unless further funding is provided.”
The CCN previously said that the increases in the national minimum wage and the national living wage have pounded new pressure on already-struggling councils, adding a total of £230 million to its members’ bills.
Jim McMahon, shadow minister for local government, described the provisional settlement as “a prime example of sticking plaster politics” and said Labour would support councils to deliver better services and local growth.
