What will a 5% council tax increase mean for you?
With councils across the country facing dire financial difficulty, it is expected most will increase the tax by the maximum amount allowed.
Labour has defended expected council tax rises as necessary to keep local authorities afloat as many households face a £100 hike in their annual payment.
Speaking on Thursday, communities minister Matthew Pennycook said he expects council tax to raise £1.8bn more next year, with another £600m to be contributed through business rates and funding connected to new homes.
He said Labour will continue to allow most local authorities in England to increase their council tax by 3% without the need for a local referendum or government approval. Councils can increase the tax by a further 2% if they provide adult social care.
With councils across the country facing dire financial difficulty, it is expected almost all of them will increase the tax by the maximum amount they are allowed.
What is council tax spent on?
Councils have a wide range of responsibilities and they are legally required to provide as well as having the power to fund their own initiatives to improve their region.
According to the Local Government Association, for every £1 of council tax spent in England, 61p of that was spent on social care, split between children and adult care in 2019. In 2010 this was just 41p.
Other spending includes highway maintenance, public transport, waste management, homelessness support, planning, leisure centres, museums, park maintenance, education support, licensing, trading standards and facilitating elections.
Council tax is only one of the ways local authorities make money, and often accounts for less than a quarter of their total income but this does vary heavily between each council.
Is my council tax going up?
The short answer is probably, but we can't be certain. The leadership of each local authority makes the decision on how much to increase council tax before the start of each financial year in April. Most will announce the changes towards the end of March.
Ahead of the 2023-2024 financial year, the County Council Network estimated that 95% of local authorities planned on increasing their rates by the maximum amount allowed. With many councils still warning they are facing financial difficulty a similar number may increase the tax in April.
Pennycook on Thursday said he expected council tax to raise an extra £1.8bn next year compared to the current financial year, indicating the central government is already expecting authorities to increase their rates.
He also said he thinks the current system of 3-5% increases was the "right threshold" and the government will keep it in place.
A 5% increase would mean the average band D council tax household faces an above-inflation increase amounting to more than £100 next year.
Which councils are in financial trouble?
Although many councils say they are facing dire financial straits, some are in more trouble than others.
Councils cannot become bankrupt under law but they can issue a section 114 notice, which is them effectively admitting they can no longer make ends meet. When the notice is issued the central government takes over the running of the authority and usually implements drastic cuts.
Since 2018, seven councils have issued section 114 notices: Northamptonshire, Croydon, Nottingham, Thurrock, Birmingham, Slough and Woking.
Northamptonshire and Nottingham have issued them twice while Croydon has issued a section 114 notice three times in the space of two years.
In Birmingham, the largest local authority in England, the government handlers have approved a 21% rise in council tax over two years and £300m worth of cuts including scrapping almost all art funding.
Many councils are also perilously close to issuing their own section 114 notices with several admitting they may be unavoidable while others are surviving by spending their savings or selling off assets.
The Institute for Government said in August that Kent and Hampshire councils had publicly said they were close to issuing a section 114 notice with over a dozen at risk of being unable to meet their commitments.
Some of the largest councils in England are also projecting giant overspends in the next financial year, with the likes of Leeds, Sheffield, Bradford and Liverpool all expecting to spend millions more than they earn.
How to check your council tax band
If you live in England or Wales, the government has a website that will tell you what council tax band your house is in here.
Each local authority will also have a breakdown of the houses in their region and the different rates per band.
