Birmingham's council tax to rise 7.5% as Government rejects bigger hike
Birmingham City Council has been told it can raise council tax by 7.5% this year. It is one of just six councils allowed to raise extra funds through council tax rises because of financial difficulties.
But Angela Rayner, Deputy Prime Minister and Secretary of State for Housing, Communities and Local Government, announced she was rejecting the council's request for a higher rise. The council had initially wanted to put up bills by 9.99% for the second year running. She told Parliament today of her decision in a written statement.
Rayner said: "Due to the 14 years of decline and instability overseen by the previous government, we know there are large numbers of councils in significant financial difficulty. This financial legacy of the previous government has resulted in a record number of councils engaging with the government about support to help them set their budgets and a record number of these councils asking for additional council tax increases.
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"Having carefully considered requests from councils, the Government has agreed small increases for six councils. For the 2025 to 2026 Settlement, bespoke additional council tax referendum principles will apply for Windsor and Maidenhead Borough Council (+4%), Birmingham City Council (+2.5%), Bradford Council (+5%), Newham Council (+4%), Somerset Council (+2.5%) and Trafford Council (+2.5%)."
Said Rayner: "These are difficult decisions that the Government has not taken lightly. We recognise the importance of limited increases in helping to prevent these councils from falling further into financial distress – but we have been clear this must be balanced with the interests of taxpayers.
"We have agreed to a limited number of requests and, in all cases, have not agreed to the full amount requested. As we have agreed, it is only for councils with the lowest levels of council tax, and we expect, even after these increases, residents will still be paying less than the average compared with similar councils. At a national level, even with these increases, the overall increase in council tax is not expected to exceed last year’s."
It means the cheapest property (Band A) in Birmingham will see their council tax rise by £104 in the coming year.
Band A (cheapest) is currently £1,389.17 , and will rise by £104.18 to £1,493.35
Band D (middle) is currently £2,083.76, and will rise by £156.82 to £2,240.04
Rayner added: "It will be for individual councils to take final decisions on setting council tax in their areas, having reached agreement locally that the increases are necessary to the council's financial recovery. I have been clear to all councils that they should take whatever steps locally they consider will help to protect the most vulnerable residents from the impact of any additional increase."
The announcement was part of the bigger local government settlement announced, which will see local authorities share in £69 billion of funding. That's up 6.8% on last year. "Change will not happen overnight, but this Settlement marks the beginning of the government’s commitment to rebuild and stabilise local government and run services that taxpayers can rely on," added Rayner.
Birmingham City Council’s core spending power will increase by £120 million on last year, which equates to an 8.9% increase, as a result of the deal. The wait on today's announcement is understood to have caused a delay in plans by the city council to publish its draft budget for the year ahead, showing where it intends to make further savings and cuts. Its publication is now expected tomorrow.
In a response to the announcement, Birmingham council leader Cllr John Cotton said the 7.5% rise agreed had been reached collaboratively following extensive talks, rather than being the result of a higher rise being turned down, as the deputy prime minister had indicated.
"The Labour Government is working far more constructively with us, and following extensive talks, we've agreed that Birmingham has made sufficient progress over the last 12 months to reduce the planned council tax increase (from 9.99% to 7.5%).
"After 14 years of Tory neglect, we now have a Government that wants to work with and support councils and the settlement provides a significant boost. Michael Gove and the previous Tory Government were adamant that council tax would have to go up by 9.9 per cent for a second successive year, regardless of any progress made over the last 12 months. The Tories wanted to punish the people of Birmingham."