Millions of Brits face £100 council tax hikes in further cost of living blow to households

30 January 2024, 10:02 | Updated: 30 January 2024, 10:05

Millions of Brits face being hit with £100 council tax hikes in another cost of living blow to households.

Levelling Up department officials are understood to have warned local authority leaders that they expect the maximum 4.99% increase to be applied to council tax bills from April as part of a £2 billion raid.

It would add around £100 to a bill for a band D property in England, according to the Guardian.

But experts have warned that the poorest households would be hit hardest with the changes.

"Increasing council tax while cutting most direct taxes – for example, national insurance, income tax and especially capital gains tax and inheritance tax – would be regressive," David Phillips, an economist at the Institute for Fiscal Studies, said.

Chancellor Jeremy Hunt allowed local authorities to increase council tax by up to five per cent as part of his first Autumn Statement in 2022.

It comes despite suggestions that tax cuts are on the way to win over Brits ahead of the next general election.

Read more: HSBC fined £57m over 'serious failings' to protect customer deposits

Read more: DUP endorses deal to restore Northern Ireland's devolved Parliament after crunch talks

A government spokesperson said: "Councils are responsible for their own finances and set council tax levels but we have been clear they should be mindful of cost of living pressures.

"We continue to protect taxpayers from excessive council tax increases through referendum principles."

Levelling Up Secretary Michael Gove announced last week that an extra £600m would be put into local government funding.

"Taking into account this new funding, local government in England will see an increase in core spending power of up to £4.5bn next year, or 7.5% in cash terms, an above-inflation increase, rising from £60.2bn in 2023-24 to up to £64.7bn," he told MPs.

But Labour has branded the move a "sticking plaster" over financial concerns for local councils.

Shadow levelling up secretary Angela Rayner described the extra funding as "an admission of failure" by "an incompetent and chaotic" government.

She said: "Yet another sticking plaster over the gaping financial wound the Tories have inflicted on our communities won't fix the fundamentals.

"Local councils are stuck in a Tory doom loop, on the frontline of the Tory cost-of-living crisis and forced to fork out millions to pay for the crises in housing and social care, and unable to plan for the future.

"We cannot trust the same party that made this mess to patch it up. Councils of all stripes are on the brink of financial ruin and it is time this Government took responsibility."