Rishi Sunak has criticised local councils for putting up council tax too much, even as authorities struggle to cope with funding shortfalls that have left several on the brink of bankruptcy.
The prime minister criticised councils in England for requesting permission to raise council tax by more than 5% as they look to balance their budgets amid a national crisis in local authority funding.
Council leaders looking to raise tax by more than the 5% cap either have to be granted permission from central government or hold a local referendum on doing so. Bedfordshire is the only council ever to have held such a referendum, holding a vote in 2015 in which local residents rejected the idea of higher tax rates.
This week the government granted permission to a series of councils to raise taxes by more than the 5% cap, including Thurrock, Woking, Slough and Birmingham. Ministers refused to allow Somerset to do the same, however, as council leaders there look to close a £100m budget deficit.
Sunak told BBC Radio Somerset: “It’s important that councils manage the cost of living for their residents, and councils that are asking the government to just allow them to whack in incredibly high council tax rises – [that] is not right.”
The prime minister added: “We can strike the balance between councils raising the money they need, but making sure they don’t unnecessarily burden people.”
He singled out the Liberal Democrat-led Somerset council for particular criticism, saying: “Somerset of course can talk to their residents if they want to have a referendum on putting in excessive council tax rises, but ultimately they should manage the finances.”
Councils in England are facing a widespread funding crisis after seeing their grant funding from central government fall by 40% from 2010 to 2020. Eight English councils, including Birmingham, Nottingham and Croydon, have issued so-called section 114 notices in recent years, in effect declaring themselves bankrupt.
Michael Gove, the communities secretary, announced last month the government would inject £600m into local government funding in an attempt to prevent more councils from going bust.
But MPs on the local government select committee warned that ministers would need to put in £4bn to avoid an “out of control” financial crisis that would affect services including adult social care and child protection services.
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The Guardian revealed last month that officials in Gove’s Department for Levelling Up, Housing and Communities have told councils they expect them to raise council tax by the maximum 4.99% in April. But some Tory officials are concerned that could counteract the effect of national tax cuts which have been promised in next month’s budget by the chancellor, Jeremy Hunt.
Sunak said: “It’s incumbent on local councils to be respectful of the demands on people’s family budgets, and to be restrained in the council tax rises they put in place.”
