Nearly all top-tier councils plan to raise council tax by the maximum permitted to avoid financial distress, new analysis shows.
Of the 136 authorities which have declared their proposals, 128 (94%) are looking to increase bills in April by 4.99% – the biggest amount allowed by the Government without having to hold a local referendum.
The County Councils Network (CCN), which released the figures, said research at the same time last year showed 75% of councils intended to impose the maximum rise.
It added council tax decisions are driven by the scale of the financial pressures authorities remain under, despite the Government’s recent emergency £600 million injection.
The CCN’s membership of 37 councils, which serve 47% of the population in England, received £240 million of the extra Government funding for 2024/25 but are planning in-year savings of more than £1 billion.
These councils, a mix of county and unitary authorities, are said to be still facing a collective funding gap of £1.1 billion over the next two years.
Sam Corcoran, Labour leader of Cheshire East Council and CCN vice-chairman, said councils have to make “some of their toughest decisions” because of increased costs and spikes in demand for social care services.
He added that, while the additional funding provided by the Government would make a tangible difference and protect services, the fragile state of council finances means council tax bills had to rise to ensure sustainability.
Mr Corcoran added: “No council leader takes the decision to raise council tax lightly as we know this will add to the cost of living for residents, but councils have had little choice but to put up council tax due to the increased demands, particularly in children’s services.
“The next Government must set out a long-term funding plan for councils while also undertaking a comprehensive reform programme to help drive down costs, especially for children’s services and home-to-school transport.”
Seventeen top-tier authorities are yet to declare their council tax intentions.
Four councils which have previously issued section 114 notices declaring effective bankruptcy – Birmingham, Woking, Slough and Thurrock – have been given special dispensation by the Government to raise council tax by 10%.
The proposed increases overall mean the average Band D household will face an increase of £103 over the year on average.
Some councils have agreed on the maximum increase but plan to introduce measures to mitigate the impact on residents, such as making support-funding available to low-income households.
The CCN said councils in county areas get 67% of their funding from council tax, which is above the 56% average for all upper-tier councils with social care responsibilities.
For some county local authorities, up to 80% of their funding comes from council tax because they receive lower Government grants than other areas, the CCN added.
Councils are said to be making savings by boosting preventative measures in children’s and adult social care, but this approach will take time to have an impact on finances.
The CCN has called on the next government to implement a “comprehensive” reform programme to drive down costs, including an overhaul of the legislative framework for school transport and action to reduce fees charged by private providers in the children’s social care market.
A Department for Levelling Up, Housing and Communities spokesperson said: “We recognise councils are facing challenges and that is why we recently announced an additional £600 million support package for councils across England, increasing their overall funding for the upcoming financial year to £64.7 billion – a 7.5% increase in cash terms.
“Councils are responsible for their own finances and set council tax levels, but we have been clear they should be mindful of cost-of-living pressures. We continue to protect taxpayers from excessive council tax increases through referendum principles.”