Overview

• The spending review assumes councils will raise council tax by up to 5% annually for three years, the fastest increase in more than two decades according to the Institute for Fiscal Studies.
• Prime Minister Sir Keir Starmer said council tax decisions rest with local authorities and rejected claims that assumed rises breach Labour’s manifesto pledge not to increase taxes on working people.
• The Local Government Association projects a funding gap exceeding £8 billion by 2028/29 despite assumed tax rises and warns that councils will have to cut more services to balance budgets.
• Thirty English councils have received exceptional financial support for 2025/26, with Birmingham alone granted an additional £180 million to stave off a Section 114 notice.
• Shadow Housing Secretary Kevin Hollinrake said the government was passing the burden onto working households and local authorities, and Liberal Democrat Vikki Slade demanded a national funding plan to avert council collapses.