Council tax in Birmingham is likely to increase by up to 10% after the government allowed the local authority to bypass the national cap without the need for a local referendum.
The increase will affect more than 1 million people in the UK’s largest local authority, which declared itself effectively bankrupt last year due to a £300m budget gap.
The levelling up secretary, Michael Gove, announced the government would not oppose the Labour council’s request to raise council tax by up to 10% from April.
This would equate to an extra £191 a year for a band D property in the city.
Gove also gave the green light for councils in Thurrock, Woking and Slough – all of which have issued section 114 notices in recent months signalling they are unable to fulfil their legal duty to balance the books – to increase their council tax rates by up to 10%.
Usually any proposed rise above the 4.99% cap would trigger a referendum, but councils can apply to bypass this under exceptional circumstances such as issuing a section 114 notice.
Gove said it was “disappointing that Birmingham city taxpayers are having to foot the bill for the council’s poor governance and decision-making”.
“Whilst the government will not oppose this request given the seriousness of the circumstances, any decision to increase council tax is solely one for Birmingham city council, who should have taken into account the pressures that people in Birmingham are currently facing on living costs,” he said.
Councillors will confirm exactly how much council tax will rise in a meeting on 5 March.
The local authority asked the government for permission to increase council tax by up to 10% a year over the next two years, with the council leader, John Cotton, previously saying the actual increase would be “dependent on the work we are doing to balance the council’s budget”.
Birmingham council is facing huge bills to settle equal pay claims brought by employees and sort out problems with a big IT upgrade, as well as dealing with increased pressure on homelessness services and social care.
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It has also lost £1bn in government funding over the past decade, Cotton said.
Robert Alden, leader of the opposition Conservative group in the city, said the council had resorted to a “tax bombshell on Brummies” to balance the books.
Birmingham city council declined to comment.
