June 12, 2025 — BlogHear.com
Households in England could see council tax rise by up to 5% annually, as local authorities aim to sustain essential services, including policing, according to details in the government’s latest Spending Review.
While local councils already have the power to increase council tax by 4.99% without requiring central government approval, Treasury documents now assume that all will raise it to the maximum limit. This anticipated increase is factored into projections showing average annual growth in police spending power of 2.3% in real terms.
The 5% council tax rise includes the police precept — a portion of the bill earmarked for police funding. Treasury figures indicate that this increase will supplement police budgets alongside central government contributions.
“This includes projected spending from additional income, including estimated funding from the police council tax precept,” Treasury documents state.
Council Discretion Remains
Chancellor Rachel Reeves clarified on BBC Breakfast that councils are not mandated to raise council tax by the full 5%, but the assumption underpins the government’s calculations.
“It is a cap, councils don’t have to increase council tax by 5%,” Reeves said. “That’s to invest in things like social care, but also, as is normal, to put money into policing.”
Despite the option to limit the increase, many councils are expected to use the full flexibility, especially given continued strain on local budgets.
Local Government Under Pressure
The Spending Review outlines a 1.4% real-terms cut in the day-to-day budget of the Ministry of Housing, Communities and Local Government. However, if councils apply the full council tax rise, the government projects an average 3.1% real-terms increase in core local authority spending power annually between 2023–24 and 2028–29.
That calculation also factors in a 3% core council tax referendum principle and a 2% adult social care precept.
Council tax revenues support services ranging from social care and libraries to waste collection and road maintenance.
Louise Gittins, chair of the Local Government Association, said that while some areas in the review—such as children’s services and transport—received welcome funding, overall pressures remain.
“Many [councils] will continue to have to increase council tax bills to try and protect services but still need to make further cutbacks,” Gittins warned.
Concerns Over Policing Budgets
Police leaders argue the projected rise in police funding may not go far, as most of it will be absorbed by pay pressures. The Police Federation of England and Wales, which represents rank-and-file officers, voiced concern over the government’s approach.
“This Spending Review should have been a turning point after 15 years of austerity… Instead, the cuts will continue and it’s the public who will pay the price,” said Tiff Lynch, acting chair of the federation.
A final decision on police pay is expected in the coming weeks.
Rising Household Bills
The potential council tax increase adds to a growing list of financial burdens for UK households, already coping with higher energy costs, water bills, and National Insurance contributions.
As councils consider their 2026–27 budgets, residents could face a tougher squeeze on household finances — with some public services still at risk of reduced capacity despite higher tax payments.
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