Local Government Finance
The question
To ask the Secretary of State for Housing, Communities and Local Government, with reference to paragraph 6.2.5 of the consultation entitled The Fair Funding Review 2.0, published on 20 June 2025, whether she has made an assessment of the potential impact of council tax increases on funding allocations to local authorities with average Band D council taxes below £2,000.
Answered by Jim McMahon
The government’s proposal is to make funding available in a way that enables all local authorities to provide the same level of service to their residents. We propose to do this by setting the notional Council Tax level at the average Band D level of Council Tax in England, which will fully equalise for a local authority’s ability to raise Council Tax.
The Spending Review confirmed that the government intends to maintain the 3% core referendum principle and a 2% principle for the adult social care precept, in line with the previous government’s policy and OBR forecasts. These principles are to protect working people and ensure residents have the final say on excessive increases. We have set out further detail on these proposals and are inviting views on their potential impact, in the Fair Funding Review 2.0, which is open until 15 August 2025. Final referendum principles will be confirmed at the local government finance settlement in the usual way.
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