Council tax rise projections suggest that UK households may face annual increases of up to 5% as part of government efforts to sustain local services and expand police funding, according to documents from the latest Spending Review.
Councils across England and Wales are permitted to raise council tax by up to 5% per year without a local referendum. While some authorities may opt for smaller increases, the Treasury’s forecast assumes most will implement the full rise to meet growing financial pressures. This will help maintain essential services such as social care, waste collection, and street cleaning.
Spending Review Anticipates Council Tax Hikes
The Spending Review includes a modest 1.1% increase in central government grants to local councils but anticipates a 2.6% rise in overall spending power. This broader figure includes income from council tax and business rates.
Chancellor Rachel Reeves clarified that the 5% cap on council tax rises remains unchanged. “Councils don’t have to raise tax by 5%, but many may do so to invest in social care and policing,” she told BBC Breakfast.
Councils experiencing severe financial strain may be allowed to exceed the cap if approved by central government or through local referendums.
Police Funding to Increase Through Precept
As part of the funding strategy, the government plans to boost police spending power by 2.3% per year in real terms. This relies partly on increasing the police precept—a portion of council tax used to support police services.
Police and Crime Commissioners can raise the police precept by up to £14 annually for Band D households without triggering a referendum. Combined with the general council tax increase, this could result in notable yearly bill hikes for millions of residents.
Treasury documents confirm that the increase in police spending assumes councils will adopt these higher precept levels.
Councils and Police Unions Warn of Ongoing Pressure
Louise Gittins, Chair of the Local Government Association, acknowledged areas of support in the Spending Review—including children’s services and housing—but warned that council budgets remain under “severe financial pressure.”
“Many councils will be forced to increase council tax just to maintain basic services, and even then, further cutbacks may be inevitable,” she said.
Tiff Lynch, Acting Chair of the Police Federation for England and Wales, expressed deep concern: “This should have been a turning point after years of austerity. Instead, cuts will persist and the public will continue to pay the price.”
The government is expected to announce decisions on police pay in the coming weeks.
