Local authorities hounded over council tax increases

Rishi Sunak has criticised local authorities for increasing council tax in an attempt to cover financial shortcomings due to lack of funding.

Local authorities faced backlash from the Prime Minister after requesting a more than 5% raise in council tax to help balance the books – with some facing potential bankruptcy.

The existing council tax cap is set at 5%, requiring local authorities to obtain permission from the government or conduct a local referendum to exceed this limit.

Councils including Birmingham, Slough, Thurrock and Woking have recently had their requests approved. 

Ministers, however, denied Somerset the same opportunity, as council leaders in the region seek to address a £100 million budget deficit.

Sunak told BBC Radio Somerset: “It’s important that councils manage the cost of living for their residents, and councils that are asking the government to just allow them to whack in incredibly high council tax rises – [that] is not right.

“We can strike the balance between councils raising the money they need, but making sure they don’t unnecessarily burden people,” he added. 

English councils are grappling with a widespread funding crisis, exacerbated by a 40% decrease in grant funding from the central government between 2010 and 2020. 

Last month, Michael Gove announced that the government would allocate £600 million to bolster local government funding, aiming to stave off further council bankruptcies. 

However, MPs on the local government select committee cautioned that to avert an escalating financial crisis, which could jeopardise vital services such as adult social care and child protection, ministers would need to allocate £4 billion.

Sunak commented: “It’s incumbent on local councils to be respectful of the demands on people’s family budgets, and to be restrained in the council tax rises they put in place.”