Conservatives respond to the Local Government Finance Settlement

Shadow Secretary of State for Levelling Up, Housing and Communities, Kevin Hollinrake MP, said:

“It is clear from this settlement that Labour are once again pushing the burden on to taxpayers after they promised to freeze council tax.

“Their Local Government Finance Settlement will mean that councils will have to raise council tax to accommodate Labour's jobs tax. This means that local people will pay more for less when it comes to local services, especially in rural areas which are losing the Rural Services Delivery Grant that Labour have abolished.

“The Labour Party have made false promises to local people, promising to freeze council tax while many councils will now have to raise it due to Labour's political choice to raise council tax. From Whitehall to your town hall, under Labour, you pay more and get less.”

ENDS 

Notes to Editors

• The Labour Government are allowing Labour and Liberal Democrat councils to raise their council tax above the 5 per cent referendum threshold. The Labour Government are allowing Labour councils to raise their council tax over the five per cent referendum threshold that was put in place by the Conservatives. Bradford Council has been allowed to increase its council tax by ten per cent, Newham has been allowed to increase its by nine per cent, Trafford Council and Birmingham City Council has been allowed to raise their council tax by 7.5 per cent. Liberal Democrat run Somerset Council has been allowed to raise its council tax by 7.5 per cent and Windsor and Maidenhead Borough Council have been allowed to raise their council tax by nine per cent (House of Commons, Local Government Finance Settlement 2025-26 Statement, 3 February 2025, link).

• Under Labour council tax bills are to rise by five per cent in April 2025. Under Labour council tax bills will rise by five per cent, meaning that the average household faces an above-inflation increase of more than £100 to their council tax bills in 2025. This is to fill the black hole in council finances that Labour are creating due to an increase in  (BBC News, 14 November 2024, link).

• Labour are prioritising funding Labour urban areas over rural areas. Rural areas will face higher council tax increases as Angela Rayner and Labour are prioritising urban Labour local authorities with funding rather than rural areas. Countryside council's have warned that they will have to put up council tax to compensate for the real term's cut that will face (The Telegraph, 18 December 2024, link).

• The Labour Government has scrapped the Rural Services Delivery Grant. The Labour Government are ‘repurposing' the Rural Services Delivery Grant  however they have not confirmed where this money will go. The statement says: ‘In this context, funding from the Rural Services Delivery Grant will be repurposed through improved methods to target funding toward areas with high need and service demand, whilst investing in the priority services people care about such as adult and children's social care. The government believes that the Rural Services Delivery Grant is outdated and does not properly assess rural need' (UK Government, Local government finance policy statement 2025 to 2026, 28 November 2024, link).

• The Labour Budget promised a big increase in council spending. The Budget stated: ‘2.81 Local government is essential to the running of the country and delivers a wide range of vital services. The government is committed to returning the sector to sustainability through a comprehensive set of measures to support local authorities in England, including: Increasing core spending power by around 3.2 per cent in real terms in 2025-26, with £1.3 billion of new grant funding including at least £600 million new grant funding for social care' (HM Treasury, Autumn Budget 2024, November 2024, link). 

• Parliamentary Questions have shown that there is a blackhole in Local Government funding of  £2.4 billion. An increase of £2.4 billion, from last year's £36.1 billion raised from council tax, would mean an across the board increase in council tax receipts of circa 6.6 per cent. Last year, council tax was £2,171 on average Band D bills in England. If mirrored, a 6.6 per cent rise would mean an increase in bills for ‘working people' of £143 a year (Hansard, 8 November 2024, PQ 11935, link, Hansard, 1 August 2024, PQ 1522, link, Hansard, 8 November 2024, PQ 11935, link, Hansard, 8 November 2024, PQ11925, link).

• An increase of £2.4 billion from last year's settlement would mean an across the board increase of 6.6 per cent in council tax. An increase of £2.4 billion, from last year's £36.1 billion raised from council tax, would mean an across the board increase in council tax receipts of circa 6.6 per cent. Last year, council tax was £2,171 on average Band D bills in England. If mirrored, a 6.6 per cent rise would mean an increase in bills for ‘working people' of £143 a year (MHCLG, Council Tax levels set by local authorities in England 2024 to 2025 (revised), May 2024, link). 

• Labour pledged to freeze council but have now revealed this to be a fake freeze pledge. In March 2023, Labour Party leader Keir Starmer said an incoming Labour Government would freeze council tax for a year, pledging: ‘a tax cut for the 99 per cent, for working people who facing a rise in their council tax' (The Guardian, 30 March 2023, link).