Council leaders in England have criticised Rishi Sunak for demanding that local authorities show “restraint” in putting up council tax bills, saying the government is to blame for underfunding.
The prime minister on Friday called for authorities to be “restrained in the council tax rises they put in place”, saying it was “incumbent on local councils to be respectful of the demands on people’s family budgets”.
He singled out for criticism those councils in England that are requesting permission to raise council tax by more than 5% as they look to balance their budgets amid a national crisis in local authority funding.
Sunak’s comments came despite the government this week granting permission to a number of councils to raise taxes by more than the 5% cap, including Thurrock, Woking, Slough and Birmingham. Ministers refused to allow Somerset to do the same, however, as council leaders there try to close a £100m budget deficit.
The Guardian also revealed last month that officials in Michael Gove’s Department for Levelling Up, Housing and Communities had told councils they were expected to raise council tax by the maximum 4.99% in April, with some Tory officials concerned this could counteract the effect of national tax cuts promised in next month’s budget.
Sunak told BBC Radio Somerset: “It’s important that councils manage the cost of living for their residents, and councils that are asking the government to just allow them to whack in incredibly high council tax rises – [that] is not right.”
However, Sir Stephen Houghton, the Labour leader of Barnsley council and head of a group of 48 urban authorities in the north, Midlands and south, said it was “remarkable” for the prime minister to call for restraint when the government had underfunded councils.
“For 13 years, revenue support grant has been cut to councils. That was a government decision and the consequence of that is councils having to increase council tax,” he said. “For the last few years, the government has told councils to fund adult social care with increases in council tax.
“The government has reduced funding to the poorest councils through the retention of business rates schemes. There is a £4bn shortfall to provide services and the government has decided not to bridge that – a government decision.”
Councils wanting to raise tax by more than the 5% cap either have to be granted permission from central government or hold a local referendum on doing so. Bedfordshire is the only council to have held such a referendum, with voters in 2015 rejecting the idea.
Nesil Caliskan, and councillor and the leader of the Local Government Association (LGA) Labour group, said: “Rishi Sunak is out of touch with working people and the public services they rely on.
“Cuts to council budgets by successive Conservative governments are to blame for the terrible state of local government.
“Councils have nowhere left to turn to raise the money needed to meet rising demands for homelessness, children’s and adult social care services.”
Pete Marland, a councillor and the chair of the LGA’s economy and resources board, said the amount of funding available to councils was “out of line with the requirements placed upon them”.
“Councils have led the way at finding ways to save money and reduce costs and this work will continue, but they will still need to raise council tax this year and many will need to make further savings to local services in order to plug remaining funding gaps.
“As the levelling up, housing and communities committee rightly highlighted, cost and demand pressures will continue to stretch council budgets to the limit.
“Without further funding, some councils will find themselves struggling to set balanced budgets in 2024-25 and potentially unable to do so as they look forward to 2025-26.”
Grant funding for councils from central government fell by 40% from 2010 to 2020. Eight English councils, including Birmingham, Nottingham and Croydon, have issued section 114 notices in recent years, in effect declaring themselves bankrupt.
Gove announced last month the government would inject £600m into local government funding in an attempt to prevent more councils from going bust.
But MPs on the local government select committee warned that ministers would need to put in £4bn to avoid an “out of control” financial crisis that would affect services, including adult social care and child protection.