Government proposal may compel wealthier regions to increase council tax

21 November 2025 , 12:57

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Government proposal may compel wealthier regions to increase council tax

The Government is planning a change which could force richer neighborhoods to hike council tax by depriving them of funding, reports claim.

According to the Telegraph, the Government’s Fair Funding Review is set to cut the amount of central funding given to local authorities which do not take up the maximum five percent council tax rise.

This would see many Conservative and Reform councils with low levels of tax not receiving help without imposing the maximum annual hike of five percent for local authorities.

This shift would see more affluent low-tax councils receiving less government funding and being forced to hike council tax, a move which could turn the predominantly non-Labour areas against their ruling parties.

Councils in London, the South-East, the East, and areas around both Manchester and Birmingham are set to be hit by the changes.

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According to the Telegraph, the Government’s Fair Funding Review is set to cut the amount of central funding given to local authorities which do not take up the maximum five percent council tax rise.

Currently, to increase the council tax by more than five percent requires a potentially divisive local referendum.

Sir James Cleverly, the shadow local government secretary, told the Telegraph that the move was “a nakedly political and partisan cash grab”.

Sir James added: “It is now entirely possible we will see council tax rates go up by 10 percent or more in some areas, every year – or 40 percent by the end of the Parliament. In fact, there is no limit on what increase councils can ask for.”

The Ministry for Housing, Communities and Local Government told The Telegraph: “The government will consider local requests for council tax flexibility where a local authority is facing significant local financial difficulty.

"The Government would not agree to requests for additional flexibilities from authorities where council taxpayers are already paying more than average.”

James Turner