Rishi Sunak has voiced his criticism of local councils for proposing increases in council tax, even as many authorities grapple with funding shortfalls pushing some to the brink of bankruptcy.
The Prime Minister specifically lambasted councils in England that sought permission to raise council tax by more than 5%, citing concerns about balancing budgets amid a national crisis in local authority funding.
Councils aiming to exceed the 5% cap need approval from central government or must conduct a local referendum. While the government granted permission for several councils, including Thurrock, Woking, Slough, and Birmingham, to raise taxes above the cap, it rejected Somerset’s request due to a £100 million budget deficit.
Sunak, in an interview with BBC Radio Somerset, emphasized the need for councils to manage residents’ cost of living. He criticized councils seeking high tax increases, stating that there is a balance to be struck between meeting financial needs and avoiding unnecessary burdens on people.
He singled out the Liberal Democrat-led Somerset council for criticism, suggesting they could hold a referendum if they wish to impose excessive tax rises but stressing the importance of managing finances.
English councils are grappling with a widespread funding crisis as their grant funding from central government has declined by 40% from 2010 to 2020. Several councils, including Birmingham, Nottingham, and Croydon, have issued section 114 notices, effectively declaring themselves bankrupt.
Last month, Communities Secretary Michael Gove announced a £600 million injection into local government funding to prevent further financial crises.
However, the local government select committee warned that an additional £4 billion might be needed to avert an “out-of-control” financial crisis affecting services like adult social care and child protection.
The Guardian reported that officials in Gove’s Department for Levelling Up, Housing and Communities expect councils to raise council tax by the maximum 4.99% in April. Some Tory officials are concerned that such increases could offset the impact of national tax cuts promised in the upcoming budget by Chancellor Jeremy Hunt.
Sunak emphasized the need for councils to be respectful of people’s family budgets and exercise restraint in implementing council tax rises.