Council Tax hikes to see some baseline household bills exceed £2,000 for first time

‘The stark contrast between the levels by which different regions are raising their council tax is indicative of the difficult political position created for them by central government’

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People living in band D council tax properties in the north east and the south west of England could see their bills exceed the £2,000 mark for the first time, a survey has suggested.

Local authorities across the UK are set to raise the amount of tax they claim in April, with research from the Daily Mirror suggesting two thirds of all major UK councils will put a 5 per cent increase on the levy going into the new financial year.

The chancellor gave local authorities the ability to add a 5 per cent hike in the budget, up from the previous cap of 2 per cent unless a higher rate was agreed by a referendum.

It comes after authorities have been leaned on throughout the pandemic, with the Local Government Association saying in November there was a £1.1bn loss that would have to be absorbed by local authorities despite support packages from central government.

Now a study by the Chartered Institute of Public Finance and Accountancy (CIPFA) has suggested band D households - properties valued to have been worth between £68,001 and £88,000 in April 1991 - could receive a bill of £2029.90 in the north east and 2,008.70 in the south west.

English band D households on average are set to see their typical council tax bill rise by 4.3 per cent - or £78.31 - across 2021/22, according to the institute’s annual tax survey.

Meanwhile, increases are particularly steep in the capital, with bills in Inner London set to rise by an average of 5.5 per cent compared to the east of England, where increases are likely to be lowest with an average uptick in the levy of 3.5 per cent.

Rob Whiteman, CIPFA CEO, said: “The stark contrast between the levels by which different regions are raising their council tax is indicative of the difficult political position created for them by central government.

“The Covid crisis has increased demand on services, and those demands need to be met with funding. Making an increase in local authority spending power contingent on council tax is regressive, putting even more pressure on those taxpayers least able to withstand it.

“A fair funding solution for local government, including the devolution of fiscal powers to address funding gaps locally, is sorely needed if councils are to continue delivering the services that have gotten us through the last year.”

It comes as all of Scotland’s 32 local authorities announced they will not increase council tax following a Scottish Government commitment to compensate those who froze the charge.

The Scottish government’s budget for the incoming financial year pledged up to £90 million for local authorities that didn’t increase the levy.

Holyrood has touted the funding boost as roughly equivalent to the amount councils would have received if a 3 per cent council tax rise had been imposed.

Additional reporting by agencies