Labour has confirmed council tax rises will be kept at the 5% cap next year, which could mean a rise of £100 for the average family’s bills.
The prime minister’s press secretary said on Wednesday that the threshold by which local authorities can increase bills would “remain the same”. Hours earlier Keir Starmer had dodged a question from Kemi Badenoch, the Conservative leader, at prime minister’s questions about whether he would keep the cap on council tax.
Speaking in the Commons, he said MPs “will know what the arrangements are”. Later on Wednesday, his press secretary said: “The threshold remains the same.”
In the Commons, Badenoch replied: “I think the house would have heard that the prime minister could neither confirm nor deny whether the cap on council tax was being raised.”
A 5% rise would be almost three times above current levels of inflation, which in October fell to 1.7% – the first time it had been below 2% since 2021.
Government statistics show the average band D council tax set by local authorities in England for 2024-25 was £2,171, which represented an increase of £106 or 5.1% on the previous year. For those in the most expensive band H households, last year’s £4,342 bill will increase by £217.
Starmer accused the Tories of leaving local authorities in an “absolutely catastrophic state” after Badenoch pressed the prime minister about the government’s funding plans for cash-strapped councils in England.
The Conservatives cited responses to written parliamentary questions in which ministers said estimated core spending power (CSP) for local government will increase from £64.7bn in 2024-25 to £68.4 bn in 2025-26, with the party adding that the budget was not providing enough new funding to cover this.
Ministers have said the CSP is subject to data changes and final figures will be published as part of the 2025-26 local government finance settlement.
Increases have been capped at 2.99% in recent years, while an extra 2% increase is permitted for councils with social care responsibilities. Councils are able to put up tax rates by up to 5% but would require government permission or a referendum for any bigger increases.
With one in four councils saying in a Local Government Association survey that they were “likely” to need emergency support to stave off bankruptcy in the next two years, increases in council taxes seem likely.
