Households in the Northeast will pay £420 more for an average Band D property in council tax in 2024/25 than those in Greater London. A survey of 215 councils taken by Chartered Institute of Public Finance and Accountancy (CIPFA) reveals that the average band D council tax in Greater London will be £1,894 while in the Northeast it will be £2,315. This is in comparison to an England and Wales aggregated Band D property of £2,161.
CIPFA’s Council Tax Survey indicates an average rise of 5.2% in council tax for a Band D property in England and Wales. This notable rise will likely compound cost-of-living pressures for residents.
With the exception of Greater London, the band D council tax for all areas of the country now exceeds £2,000. It was only in 2021 when Northeast and Southwest England surpassed this mark for the first time, as reported by CIPFA.
A regional breakdown of the data paints a worrisome picture, where poorer areas of the country pay more council tax than wealthier regions. The Northeast will see an increase of £112.14 in 2024/25, compared to an increase of £105.57 in Greater London.
In 2023, the funding shortfall was particularly evident in three Councils (Croydon, Thurrock and Slough) where central government intervened due to financial distress. These councils were then allowed to raise council tax above the national referendum threshold.
For 2024, two of these authorities, Slough and Thurrock, have continued to be able to increase their council tax above the national referendum threshold. Slough and Thurrock are joined this year by Woking and Birmingham, the largest local authority in Western Europe, who effectively declared themselves bankrupt, by issuing S114 notices during 2023/24.
At a time when public services are struggling to meet high demand, an increase in council tax will do little to fix the crumbling state of public services across England. For councils responsible for adult social care, 75% of their income is spent on this demand-led service, as revealed by CIPFA’s Financial Resilience Index. This leaves only 25% of a council’s budget for all other services.
Although inflation is reducing, local authorities are still faced with higher running costs. Despite the use of the council tax head room, some councils still need to use reserves to balance their budgets.
Rob Whiteman, CIPFA CEO, said:
“In the absence of long-term funding, the rise in council tax is an example of the government’s presiding over a failing funding system. With central government prioritising cuts in taxes and consequent spending cuts, this places more burden on councils to increase the level of council tax by the maximum allowed at a time and many residents will see a reduction in the level of service provided.
“The decision to raise council tax would have been a difficult one, with many people in communities struggling amid cost-of-living challenges. Councils need long-term and sustainable solutions from government rather than short-term tax decision in advance of the election.”
Iain Murray, Director of Public Financial Management at CIPFA, said:
“It is concerning that in some places, the funds raised from a rise in council tax will still not ensure proper maintenance of public services. The continuous council tax gap between London and the rest of the country further reflects the profound regional inequalities that exist.
“With the public sector model crying out for systematic reform, CIPFA’s council tax survey leaves us asking: What is the role of local government? What do we want our public services to provide for us? And how do we fund this?”
Council tax forms a vital part of a local authority’s income. Yet, central government reduced funding at a time when demand for services is increasing. It is clear that local government is crumbling under the pressure to plug the gaps in funding shortfalls.
While hidden under the cloak of local government decision-making, the government has left councils with no other option but to further increase council tax by the maximum limit.
Notes to editor
1. Spokespersons are available to be interviewed.
2. Download the data from CIPFA’s annual council tax survey .
3. CIPFA's Council Tax Survey was based on 215 responses to questionnaires sent to authorities in England and Wales.
4. Band D properties are used as the typical value as they act as the baseline figure from which other bands are calculated.
5. CIPFA’s Financial Resilience Index is a comparative analytical tool that shows a council's position on a range of measures associated with financial risk.