Millions of households are facing a council tax hike beyond normal thresholds this year, as Angela Rayner warned of further “tough decisions” to “rebuild and stabilise” local government. The Deputy Prime Minister said challenges remain in the Government’s bid “to fix the broken system we inherited”, and stressed the need to strike a balance between preventing councils experiencing “further financial distress” and the “interests of taxpayers”.

Six councils, serving more than two million people in total, have been granted permission to increase council tax beyond the established annual threshold of 5%. Bradford Council will be able to increase the levy by a further 5%, while Windsor and Maidenhead Council and Newham Council can all increased bills by 4%. The remaining councils – Birmingham, Somerset and Trafford – have been granted a further 2.5% uplift beyond the threshold.

Explaining the move in a written statement, Ms Rayner said: “These are difficult decisions that Government has not taken lightly. We recognise the importance of limited increases in helping to prevent these councils 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. Where we have agreed, it is only for councils with amongst the lowest levels of council tax, and where we expect, even after these increases, residents will still be paying less than the average compared with similar councils.”.

Ms Rayner confirmed that in spite of these increases, the overall national increase in council tax is not expected to exceed last year’s rise of 5.1%. The statement confirmed that councils will have access to more than £69 billion in funding this year – a 6.8% increase in cash terms compared to 2024-25. The settlement provides more than £2 billion in direct grant funding above revenue received from council tax, with no council experiencing a reduction in core spending power.

The Government previously announced £233 million for homelessness services and £500 million for pothole repairs. A “Recovery Grant” has been established worth £600 million as an interim measure. Ms Rayner confirmed that £60 million has been put aside for “long-term improvements”, including facilitating further a “devolution revolution” and fixing the system of local government audit which has been plagued by delays in recent years.

In addition, the Government is providing up to £3.7 billion additional funding to councils with social care responsibilities, including a £880 million boost to the Social Care Grant. A new Children’s Social Care Prevention Grant will be increased to £270 million in 2025 and 2026. It will be allocated according to “estimated need” and will see investment in prevention for children double more than £500 million.

Overall, the Government said it is providing more than £10 billion for social care. Ms Rayner also confirmed allocations worth £502 million to assist councils to manage the impact of increases to employer national insurance contributions. The Deputy Prime Minister added: “Councils deliver vital services across the country – driving growth and local economies and providing a lifeline for those that need it most.