While the nation grapples with the ongoing cost of living crisis, a significant change to council tax rules is quietly set to deliver another financial blow to households across England. An investigation has uncovered what one MP describes as a "devastating" policy shift that could see millions paying substantially more.
The Stealth Tax Hike
At the heart of the issue lies a little-discussed alteration in how local authorities can increase council tax without holding a referendum. Previously capped at 2.99%, councils can now raise bills by 4.99% annually – a substantial increase that many are expected to implement to cover funding shortfalls.
Layla Moran, Liberal Democrat MP and party spokesperson, didn't mince words: "This is a devastating real-terms cut to local authorities, and it's going to mean council tax is going to go up and up and up."
Birmingham's Perfect Storm
The situation is particularly acute in Birmingham, where the city council's financial troubles have created what Moran calls a "perfect storm." The combination of reduced government funding and increased cost pressures has left many local authorities with few options beyond maximising tax increases.
The implications are stark:
- Average Band D properties facing annual increases of nearly £100
- Reduced services despite higher tax bills
- Particular pressure on low-income households
Beyond the Headlines
What makes this situation particularly concerning, according to experts, is the lack of public awareness. While national insurance cuts and other budget measures dominate headlines, this fundamental change to local taxation has flown largely under the radar.
Moran emphasised the human impact: "It's going to be really devastating for so many households who are already struggling." The timing couldn't be worse, with energy bills still high and food costs continuing to pressure family budgets.
What Comes Next?
With many councils expected to implement the maximum allowable increases in the coming financial year, households should prepare for higher bills arriving this spring. The debate continues about whether this represents a necessary measure to protect local services or an unfair burden shift from central to local taxation.
As one Westminster insider noted, this policy change may prove to be one of the most significant – yet least discussed – financial decisions affecting British households this year.
