Last week’s spending review indicated that local authorities would raise council tax by 5 per cent each year over the next three years, which economists said would be the fastest rise in the levy in more than a generation.
The LGA said 30 councils have been given exceptional financial support for this financial year (2025-26). This is effectively an emergency grant to stave off a local authority having to effectively announce bankruptcy – officially called a Section 114 notice.
Birmingham will receive an extra £180m in exceptional financial support this year, on top of almost £500m last year.
The body also warned that a 5 per cent increase in council tax “will place a significant burden on households”.
Pressed by reporters during his visit to the G7 in Canada as to whether the 5 per cent rise was a breach of his manifesto pledge not to raise taxes on “working people”, the Prime Minister insisted: “The first thing is council tax rises are obviously for councils to decide, year on year, which is what they all do.”
“Year one was cleaning up that mess, stabilising the economy and creating the conditions for the Spending Review. The Spending Review now allows us to show what a difference a Labour government makes and the sort of country that we want to be.”
“Keir Starmer vowed not to raise taxes on working people — now he’s hiking National Insurance and recommending councils slam them with 5 per cent council tax rises.
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Last week, the Institute for Fiscal Studies (IFS) said the assumed council tax rises set out in the spending review would result in the fastest rise in council tax since 2001.
IFS director Paul Johnson said that local government in England did “perhaps a little bit better than it might have expected” out of the Chancellor’s statement on Wednesday, but the “sting in the tail” is the assumption that “council tax bills will rise by 5 per cent a year” as part of the funding.
Exceptional Financial Support requests from local authorities: 2025-26
Barnet£55.7m (support agreed in principle)Birmingham£180.0m (support agreed in principle)Note: For support agreed in principle for 2024-25, this has been revised to £490.0m (from £685.0m)Bradford£127.1m (support agreed in principle)Cheshire East£25.3m (support agreed in principle)Note: For support agreed in principle for 2024-25, this has been revised to £17.6m (from £6m)Croydon£136.0m (support agreed in principle)Note: For support agreed in principle for 2023-24, this has been revised to £50.0m (from £63.0m), and for support agreed in-principle for 2024-25, this has been revised to £51m (from £38m)Cumberland£23.439m (support agreed in principle)Eastbourne£2.0m (support agreed in principle)Enfield£10.0m (support agreed in principle)£20.0m (support agreed in principle for 2024-25)Halton£32.0m (support agreed in principle)£20.8m (support agreed in principle 2024-25)Haringey£37.0m (support agreed in principle)£28.0m (support agreed in principle for 2024-25)Havering£88.0m (support agreed in principle)Medway£18.484m (support agreed in principle)Note: For support agreed in principle for 2024-25, this has been revised to £23.171m (from £14.742m)Newham£51.2m (support agreed in principle)£16.0m (support agreed in principle for 2024-25)Nottingham£25.0m (support agreed in principle)Shropshire£26.9m (support agreed in principle for 2024-25)Slough£15.709m (support agreed in principle)Solihull£32.658m (support agreed in principle)£15.615m (support agreed in principle for 2024-25)Somerset£63.0m (support agreed in principle)Note: Provisionally includes revised support agreed in 2024-25, subject to final confirmationSouthampton£89.9m (support agreed in principle)Note: Provisionally includes revised support agreed in 2024-25, subject to final confirmationStoke-on-Trent£16.8m (support agreed in principle)Swindon£14.7m (support agreed in principle)Thurrock£72.0m (support agreed in principle)Note: For support agreed in principle for 2022-23, this has been revised to £130.0m (from £40.0m agreed in February 2024), for 2023-24, this has been revised to £184.0m (from £234.5m agreed in February 2024), and for 2024-25, this has been revised to £96.0m (from £68.6m agreed in February 2024)Trafford£9.6m (support agreed in principle)West Berkshire£3.0m (support agreed in principle)£13.0m (support agreed in principle for 2024-25)Windsor & Maidenhead£41.0m (support agreed in principle)£62.0m (support agreed in principle for 2024-25)Wirral£7.5m (support agreed in principle)£20.0m (support agreed in principle for 2024-25)Woking£74.6m (support agreed in principle)Note: For support agreed in principle for 2024-25, this has been revised to £93.6m (from £95.6m)Worcestershire£33.6m (support agreed in principle)Worthing£2.0m (support agreed in principle)Lambeth£40.0m (support agreed in principle)Source: Ministry of Housing, Communities and Local Government. Feb 2025
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