Local authorities warn ‘difficult but necessary’ council tax rises are needed to help prevent insolvency, as new analysis reveals 95% plan maximum increase

Virtually every local authority with responsibility for social care in England plans on raising its council tax by the maximum this April, with council leaders saying such rises are necessary to ensure their finances are sustainable in the long-term.

Data compiled by the County Councils Network (CCN) finds that out of 136 county and unitary local authorities in England who have so far published their budget proposals, 128 (95%) plan on raising their council tax by the maximum permitted – 4.99%.

These increases come despite councils receiving an emergency injection of £600m last month, following intense lobbying by CCN. County leaders said that the additional funding is welcome and would help safeguard frontline services, many of which are relied on by struggling households.

However, upper-tier councils in county areas are still under significant pressure. Despite receiving £240m of this additional funding – and planning savings of over £1bn – those county and unitary authorities still face a collective funding gap of £1.1bn over the next two years, even after council tax rises.

County leaders say they recognise that these ‘difficult’ council tax increases will add to residents’ cost of living, but with two-thirds of county authorities’ funding now derived solely from council tax, rises of up to 4.99% are necessary to protect vital services and help prevent financial insolvency in future years.

Councils say that the government’s extra funding next year – and their own council tax rises – gives them breathing space. But with a general election taking place this year, CCN argue the next government must set out a long-term financial plan for local authorities.

CCN’s annual council tax tracker, which analyses published or approved 2024/25 budgets of upper-tier councils in England, reveals:

• Virtually every council plans on raising council tax by the maximum 4.99% next year: a total of 128 local authorities out of 136 who have published proposals. No authority has declined to propose a council tax rise, with the lowest put forward 2.99%. A total of 17 authorities are yet to declare, whilst four authorities – Birmingham, Woking, Slough and Thurrock – have special dispensation to raise council tax by 10%.
• The number of authorities planning maximum rises is significantly higher than in 2023/24, with CCN’s tracker this time last year showing that three in four (75%) of councils intended to levy the maximum rise.
• These changes will mean that the average Band D household faces an increase of £103 over the year on average, but this will vary from area to area. Split across a year, this rise equates to less than £2 (£1.98) a week.
• Councils in county areas get 67% of their funding from council tax, which is higher than the England average of 56%. For some county local authorities, up to 80% of their funding is derived from council tax. This is because they receive lower government grants than other areas and are therefore more reliant on council tax.

Last month, the government made available £600m extra to local government for 2024/25. With £500m of this ringfenced for social care, council leaders said the extra funding will make a tangible difference to protecting and enhancing local services, but extremely tough decisions remain in a climate where inflation is still historically high and demand for care services shows no sign of slowing down.

Measures put forward by councils in their budgets include spending on preventative measures in children’s services and adult social care, but savings here will only be realised in coming years. Other proposals include greater use of technology and digitisation, as well as investment in road repairs, town centres, and housing.

Alongside a long-term funding plan, CCN say the next government must undertake a comprehensive reform programme to help drive down costs. This includes overhauling the legislative framework for home to school transport, as well as intervening in the children’s social care market to cap private provider fees to reduce councils’ exposure to unaffordable costs.

Cllr Sam Corcoran, Vice-Chair of the County Councils Network, said:

“This year councils have faced extreme financial pressures, with local authorities having to make some of their toughest decisions ever due to rising costs and spikes in demand for care services. Last month, the government provided a very welcome £600m of additional funding for councils. This will make a tangible difference to protecting valued frontline services and in easing the pressures we face.

“Despite this, county authorities still face a £1.1bn budget shortfall over the next two years. With council tax now accounting for two-thirds of the average county authority’s funding, we have little choice but to take the difficult but necessary decision to raise council tax by 4.99% to continue to protect services and ward off the threat of financial insolvency in the future.

“No council leader takes the decision to raise council tax lightly as we know this will add to the cost-of-living for residents, but councils have had little choice but to put up council tax due to the increased demands, particularly in children’s services. The next government must set out set out a long-term funding plan for councils while also undertaking a comprehensive reform programme to help drive down costs, especially for children’s services and home to school transport.”

Notes to editor

• CCN has analysed published budget proposals from 136 upper-tier local authorities who have social care responsibilities. These are the councils that are responsible for the majority of local services and can levy rates of up to 2.99% for general taxation and 2% for the Adult Social Care Precept, which is funding specifically for adult social care.
• The figures on projected rises from April for the average Band D household take averages from this government dataset on 2023-24 council tax rates and apply a 4.99% increase to those average figures.
• Figures on council tax as a proportion of spend have been calculated for the CCN by Pixel Financial Management, and are based on Core Spending Power for 2024/25.
• The £1.1bn funding gap figure has been provided from the Society of County Treasurers, and encompasses the 40 county and unitary authorities within their membership.