Summary
The Labour Party has allowed six areas in southern England to increase council tax rates by more than 5% without requiring voter approval for two years. This decision follows a reduction in government funding for these areas, as funding will now be redirected toward more deprived areas. The change aims to address funding inequities but has faced criticism for potentially affecting councils that keep taxes low.
Key Facts
- Six areas in and around London can increase council tax by over 5% for two years without voter approval.
- The areas include Kensington and Chelsea, Westminster, Wandsworth, Hammersmith and Fulham, City of London, and Windsor and Maidenhead.
- These areas are expected to receive less government funding as more funds are redirected to deprived areas.
- The new funding model will be phased in over three years starting in 2026.
- The goal is to support councils with higher deprivation and more properties in lower tax bands.
- Changes were made to the original proposals to consider housing costs in inner London.
- The Institute of Fiscal Studies noted that these six councils would face significant funding reductions.
- The UK government will increase overall council funding by £3.9 billion next year, assuming a general council tax increase of 5%.
