Key points announced ahead of Rachel Reeves' spending review
Spending Review: 'We'll make working people better off,' vows Reeves but fears grow that London will miss out
'We'll make working people better off,' vows Reeves in Spending Review
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Scottish Sun
24 minutes ago
- Scottish Sun
Council tax bills set to rise at fastest rate 20 years after Rachel Reeves spending review, economist warns
This comes despite Reeves insisting she wouldn't need to raise taxes to fund her spending review TAX BLOW Council tax bills set to rise at fastest rate 20 years after Rachel Reeves spending review, economist warns COUNCIL tax bills are expected to increase at their fastest rate in 20 years following Rachel Reeves' spending review. This prediction comes from Paul Johnson, the head of the Institute for Fiscal Studies (IFS). Advertisement 1 In England, local authorities can increase council tax by up to 4.99% each April without holding a referendum Credit: Getty Johnson said that local government in England received "perhaps a little bit better than it might have expected" from the Chancellor's statement on Wednesday. However, he warned of a "sting in the tail" - the assumption that council tax bills will rise by 5% annually as part of the funding plan. The core spending power of councils is set to increase by 2.6% a year from next year, and "if English councils do choose 5% increases – and most almost certainly will – council tax bills look set to rise at their fastest rate over any parliament since 2001-05", Johnson said. On Wednesday, Ms Reeves said that ministers will not be "going above" the 5% annual increases in council tax. Advertisement She told ITV: "The previous government increased council tax by 5% a year, and we have stuck to that. We won't be going above that. "That is the council tax policy that we inherited from the previous government, and that we will be continuing." The NHS was the biggest winner from Wednesday's announcement, which allocated £300billion to public services. Its budget will increase by £29billion a year in real terms. Advertisement Billions of pounds was also allocated to regional infrastructure projects, £39 billion was set aside for social housing, and defence spending was confirmed to increase by £11billion. The Home Office will get less money in the coming years, even though there are promises to hire more police officers and reduce crime. How to challenge your council tax band Treasury documents reveal that Home Office spending will drop by 1.4% per year between 2025-26 and 2028-29, one of the largest cuts among departments. However, Reeves stated that police spending power would still rise by 2.3%, potentially through increased council tax, though the exact amount is unclear. Advertisement Johnson said yesterday on X (formerly Twitter): "Note wording on police funding. Increase in 'spending power' implies that higher precepts from local taxes will play their part." Ruth Curtice, head of the Resolution Foundation, echoed this view. She pointed out that low and middle-income families had gained from the spending review, with the poorest fifth getting an average of £1,700 extra for services like schools, hospitals, and the police. However, she warned that without economic growth, more tax rises could be on the way this autumn to balance the books. Advertisement This comes after the Office for National Statistics (ONS) revealed that the economy shrank more than expected in April, marking the biggest drop in 18 months. GDP dropped by 0.3%, driven by a sharp decline in manufacturing and a record fall in exports to the US after tariff hikes by President Donald Trump. Speaking after delivering her spending review yesterday, Ms Reeves insisted she would not have to raise taxes to cover her spending review. What council tax support is available? By James Flanders, Chief Consumer Reporter There are several ways you can get discounts and reductions on your council tax bill. In some cases, you can even get the bill completely wiped with a council tax reduction. Factors such as your household income, whether you have children, and if you receive any benefits, will influence what you get. To apply, visit here. You'll need your National Insurance number, bank statements, a recent payslip or letter from the Jobcentre, and a passport or driving licence when filling out the details. Below, we reveal all the ways you can get discounts or a reduction on your bill: Single person discount If you live on your own, you can get 25% off your council tax bill. This also applies if there is one adult and one student living together, or one adult and one person classed as severely mentally impaired. If you live with someone who doesn't have to pay council tax, such as a carer or someone who is severely mentally impaired, you could get a larger reduction too, of up to 50%. And, if you live in an all-student household, you could get a 100% discount. Retirees Pensioners may also find themselves eligible for a council tax reduction. If you receive the Guarantee Credit element of Pension Credit, you may not have to pay a penny. If not, you could still get help if you have a low income and less than £16,000 in savings. And a pensioner who lives alone will be entitled to a 25% discount too. Low-income households If you are on a low income or receiving benefits, you could be eligible for a reduction on your council tax, depending on where you live. You could also get a deferral if you're struggling to pay your bill, or you can speak to your council about setting up a payment plan to manage the cost. But one thing to remember is if you are struggling you should contact your council as early as you can. How are council tax bills calculated? In England, local authorities can increase council tax by up to 4.99% each April without holding a referendum. Advertisement This is broken down into a 2.99% increase for general spending and a 2% precept for adult social care. Any increase above this 4.99% limit requires a local referendum to gain public approval. In areas governed by 'two-tier authorities', where responsibilities are divided between two councils, your council tax bill is split into two charges - one set by your county council and another determined by your district, borough, or city council. The proportion of your bill allocated to each council varies depending on the authority, though county councils typically claim the largest share. Advertisement District councils are permitted to increase their portion of the charge by up to 3% annually without the need for a referendum However, these charges have been excluded from our dataset. In addition to the above charges, your council tax also includes contributions towards local police and crime commissioners, fire and rescue services, as well as any applicable town or parish council charges. Councils typically finalise their council tax increases by early March, with the new rates coming into effect from April 1. Advertisement Check if you can claim a council tax refund Over three million households are owed a combined total of £544million in council tax refunds, according to a Sun investigation. The average refund due is around £178, but some could be owed as much as £3,659. Sun Money submitted a Freedom of Information Request to all 349 local authorities in England, Scotland and Wales to find out just how much taxpayer money our councils are sitting on. You can check to see how much cash your local authority might be sitting on by searching for your council in our tool. Advertisement It's surprisingly easy to overpay your council tax, and millions of us do. One of the main reasons is moving house. Council tax is usually billed annually from April to April, but paid in instalments, which means you're always paying some in advance. Therefore, if you move out before the year's end, you'll likely be due a refund for the remaining months. Advertisement Another reason for overpayments is a change in your property's council tax band. If the band is lowered, you're due a refund for the over payments made at the higher rate. Finally, forgetting to cancel your direct debit after moving out can lead to continued payments and further overpayments. Finding out if you're owed a council tax refund is easier than you think. Advertisement Many councils have online claim forms available on their website. To find your local council's site, visit here. You can also contact them directly by phone, email, or live chat.
The Sun
25 minutes ago
- The Sun
Council tax bills set to rise at fastest rate 20 years after Rachel Reeves spending review, economist warns
COUNCIL tax bills are expected to increase at their fastest rate in 20 years following Rachel Reeves' spending review. This prediction comes from Paul Johnson, the head of the Institute for Fiscal Studies (IFS). Johnson said that local government in England received "perhaps a little bit better than it might have expected" from the Chancellor's statement on Wednesday. However, he warned of a "sting in the tail" - the assumption that council tax bills will rise by 5% annually as part of the funding plan. The core spending power of councils is set to increase by 2.6% a year from next year, and "if English councils do choose 5% increases – and most almost certainly will – council tax bills look set to rise at their fastest rate over any parliament since 2001-05", Johnson said. On Wednesday, Ms Reeves said that ministers will not be "going above" the 5% annual increases in council tax. She told ITV: "The previous government increased council tax by 5% a year, and we have stuck to that. We won't be going above that. "That is the council tax policy that we inherited from the previous government, and that we will be continuing." The NHS was the biggest winner from Wednesday's announcement, which allocated £300billion to public services. Its budget will increase by £29billion a year in real terms. Billions of pounds was also allocated to regional infrastructure projects, £39 billion was set aside for social housing, and defence spending was confirmed to increase by £11billion. The Home Office will get less money in the coming years, even though there are promises to hire more police officers and reduce crime. How to challenge your council tax band Treasury documents reveal that Home Office spending will drop by 1.4% per year between 2025-26 and 2028-29, one of the largest cuts among departments. However, Reeves stated that police spending power would still rise by 2.3%, potentially through increased council tax, though the exact amount is unclear. Johnson said yesterday on X (formerly Twitter): "Note wording on police funding. Increase in 'spending power' implies that higher precepts from local taxes will play their part." Ruth Curtice, head of the Resolution Foundation, echoed this view. She pointed out that low and middle-income families had gained from the spending review, with the poorest fifth getting an average of £1,700 extra for services like schools, hospitals, and the police. However, she warned that without economic growth, more tax rises could be on the way this autumn to balance the books. This comes after the Office for National Statistics (ONS) revealed that the economy shrank more than expected in April, marking the biggest drop in 18 months. GDP dropped by 0.3%, driven by a sharp decline in manufacturing and a record fall in exports to the US after tariff hikes by President Donald Trump. Speaking after delivering her spending review yesterday, Ms Reeves insisted she would not have to raise taxes to cover her spending review. What council tax support is available? By James Flanders, Chief Consumer Reporter There are several ways you can get discounts and reductions on your council tax bill. In some cases, you can even get the bill completely wiped with a council tax reduction. Factors such as your household income, whether you have children, and if you receive any benefits, will influence what you get. To apply, visit here. You'll need your National Insurance number, bank statements, a recent payslip or letter from the Jobcentre, and a passport or driving licence when filling out the details. Below, we reveal all the ways you can get discounts or a reduction on your bill: Single person discount If you live on your own, you can get 25% off your council tax bill. This also applies if there is one adult and one student living together, or one adult and one person classed as severely mentally impaired. If you live with someone who doesn't have to pay council tax, such as a carer or someone who is severely mentally impaired, you could get a larger reduction too, of up to 50%. And, if you live in an all-student household, you could get a 100% discount. Retirees Pensioners may also find themselves eligible for a council tax reduction. If you receive the Guarantee Credit element of Pension Credit, you may not have to pay a penny. If not, you could still get help if you have a low income and less than £16,000 in savings. And a pensioner who lives alone will be entitled to a 25% discount too. Low-income households If you are on a low income or receiving benefits, you could be eligible for a reduction on your council tax, depending on where you live. You could also get a deferral if you're struggling to pay your bill, or you can speak to your council about setting up a payment plan to manage the cost. But one thing to remember is if you are struggling you should contact your council as early as you can. How are council tax bills calculated? In England, local authorities can increase council tax by up to 4.99% each April without holding a referendum. This is broken down into a 2.99% increase for general spending and a 2% precept for adult social care. Any increase above this 4.99% limit requires a local referendum to gain public approval. In areas governed by 'two-tier authorities', where responsibilities are divided between two councils, your council tax bill is split into two charges - one set by your county council and another determined by your district, borough, or city council. The proportion of your bill allocated to each council varies depending on the authority, though county councils typically claim the largest share. District councils are permitted to increase their portion of the charge by up to 3% annually without the need for a referendum However, these charges have been excluded from our dataset. In addition to the above charges, your council tax also includes contributions towards local police and crime commissioners, fire and rescue services, as well as any applicable town or parish council charges. Councils typically finalise their council tax increases by early March, with the new rates coming into effect from April 1. Check if you can claim a council tax refund Over three million households are owed a combined total of £544million in council tax refunds, according to a Sun investigation. The average refund due is around £178, but some could be owed as much as £3,659. Sun Money submitted a Freedom of Information Request to all 349 local authorities in England, Scotland and Wales to find out just how much taxpayer money our councils are sitting on. You can check to see how much cash your local authority might be sitting on by searching for your council in our tool. It's surprisingly easy to overpay your council tax, and millions of us do. One of the main reasons is moving house. Council tax is usually billed annually from April to April, but paid in instalments, which means you're always paying some in advance. Therefore, if you move out before the year's end, you'll likely be due a refund for the remaining months. Another reason for overpayments is a change in your property's council tax band. If the band is lowered, you're due a refund for the over payments made at the higher rate. Finally, forgetting to cancel your direct debit after moving out can lead to continued payments and further overpayments. Finding out if you're owed a council tax refund is easier than you think. Many councils have online claim forms available on their website. To find your local council's site, visit here. You can also contact them directly by phone, email, or live chat.
Daily Mail
26 minutes ago
- Daily Mail
How much could YOUR council tax be going up? The pain looming for households after Rachel Reeves signals 5% rises for next three years
Households are braced for more council tax pain after Rachel Reeves signalled maximum rises over the next three years. As part of the Chancellor's spending plans, the Treasury suggested that local authorities would hike bills by 4.99 per cent a year for the rest of this Parliament. This is the maximum hike allowed, in normal circumstances, before councils are required to hold a local referendum. The 4.99 per cent cap is made up of 2.99 per cent for general spending and a 2 per cent adult social care precept. Ms Reeves said Labour would not be 'going above' the 4.99 per cent cap, but did not deny her spending review - announced yesterday - is based on maximum rises. 'The previous government increased council tax by 5 per cent a year, and we have stuck to that. We won't be going above that,' the Chancellor told ITV. 'That is the council tax policy that we inherited from the previous government, and that we will be continuing.' It means the average Band D property faces an extra £395 in council tax in 2028-29 compared to this year, the Liberal Democrats estimated. Experts warned council tax bills are set to rise at their fastest rate for two decades in the wake of Ms Reeves' spending review. Paul Johnson, of the Institute for Fiscal Studies, said local government in England did 'perhaps a little bit better than it might have expected' out of the Chancellor's statement on Wednesday. But he added the 'sting in the tail' is the assumption that 'council tax bills will rise by 5 per cent a year' as part of the funding. The core spending power of councils is set to increase by 2.6 per cent a year from next year. 'If English councils do choose 5 per cent increases – and most almost certainly will – council tax bills look set to rise at their fastest rate over any parliament since 2001 to 2005', Mr Johnson said on Thursday. The Chancellor's spending review was also shown to assume a £14 rise each year in the police precept, the part of the police budget that comes from council tax. Kevin Hollinrake, the Tory communities spokesman, said households faced a tax 'double-whammy'. He warned hikes in council tax bills would also likely be accompanied by further levy rises in Ms Reeves' next budget, as she looks to fund her spending plans. Mr Hollinrake said: 'Rachel Reeves claimed council tax wouldn't have to go up to afford her spending spree, but this tax bombshell shows that you can't trust a word she says. 'Because of Labour's profligate spending plans today, tax and borrowing increases in the autumn are now inevitable. 'This tax double-whammy is just rubbing salt in the wounds, and means hundreds of pounds less in take-home pay for hard-working people.' Liberal Democrat MP Lisa Smart, the party's home affairs spokesperson, said: 'The Government is relying on a hidden council tax bombshell to fund their half-hearted rise in police funding as they pass the buck to local families. 'After frontline policing was neglected for years under the Conservatives, local communities deserve better than this sleight of hand. 'The Government must put more bobbies on the beat, with the proper funding to make it happen. 'Liberal Democrats will keep pushing for the proper neighbourhood policing our communities deserve.' Despite the increases in council tax, local government representatives said there would still not be enough cash to fund services and warned of further cuts. Tim Oliver, chairman of the County Councils Network, said: 'This spending review will not be a silver bullet for councils' financial challenges, and much of the increase in 'core spending power' is derived from the assumption that local authorities will levy maximum 5 per cent council tax rises each year. 'Even accounting for these, the sums today fall well short of filling the projected £2.2billion funding gap faced by county and unitary councils next year and consequently further service cuts will be hard to avoid.'
