A cross-party group of MPs has urged Andy Burnham to give local authorities greater freedom to raise council tax as part of his proposed devolution reforms. The change could affect households across England by allowing councils to increase bills beyond current limits without first holding a local referendum.
The proposal has not been adopted as government policy, and no automatic increase has been announced. Residents should continue paying the amount shown on their existing council tax bills unless their local authority formally approves a change and issues a new demand.
The MPs argue that elected councils should have more control over how they raise money for services such as social care, rubbish collection, libraries, housing and road maintenance. Supporters say councils should be accountable directly to local voters rather than being restricted by national rules.
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How council tax increases currently work
Under the present system in England, most local authorities must hold a referendum before increasing council tax above a limit set by central government.
For councils responsible for adult social care, the usual threshold has been around 5 per cent when the standard increase and the social care charge are combined. Authorities without adult social care responsibilities generally face a lower limit.
The referendum requirement does not completely prevent larger rises, but it makes them harder to introduce. Councils must ask local residents to approve an increase above the permitted level, and organising a vote can be expensive.
The MPs want the restriction removed so that councillors can set rates through the normal local budget process.
Clive Betts, the Labour MP who chairs the Commons Housing, Communities and Local Government Committee, has argued that councils should be trusted to make their own financial decisions and then answer to voters at local elections.
However, critics are likely to question whether removing the cap could expose households to steep increases, particularly in areas where councils face severe funding pressures.
Calls for higher bills on expensive homes
The debate also comes as Burnham faces pressure to reform the wider property tax system and make owners of the most valuable homes pay more.
Council tax in England is still largely based on property values from April 1991. Critics say this makes the system unfair because house prices have risen at very different rates across the country during the past three decades.
Some households in modest homes in northern England and the Midlands can pay a larger share of their property’s value than owners of multimillion-pound homes in London. England’s highest council tax category, Band H, covers every property that would have been worth more than £320,000 in 1991, meaning there is no extra band for homes now worth several million pounds.
Burnham has previously described council tax as highly regressive and has supported discussions about replacing it with a charge linked more closely to current property or land values. One proposal backed by the Fairer Share campaign would replace council tax and stamp duty with an annual tax based on a percentage of each home’s value.
Such a reform could reduce bills for many households in lower-value areas but increase costs for some owners in London and the South East. It could also affect people who own valuable homes but have relatively low incomes, including pensioners who have lived in the same property for many years.
No immediate change for households
Any major reform would require detailed legislation, a reliable system for valuing properties and decisions on protections for people who may struggle to pay.
Possible safeguards could include caps on annual increases, discounts, exemptions or arrangements allowing some homeowners to delay payment until a property is sold. None of those protections should be assumed unless they are included in an official policy.
A separate High Value Council Tax Surcharge is already due to apply in England from April 2028 under plans announced in the 2025 Budget. As currently designed, it would affect homes worth more than £2 million, with annual charges ranging from £2,500 to £7,500 depending on the property’s value.
Reports have suggested Burnham could consider lowering that threshold, but no final decision has been confirmed. Any change would need to be formally announced and taken through the appropriate government and parliamentary process.
For now, council tax payers do not need to take any action beyond checking correspondence from their council and ensuring they claim any discounts or reductions for which they qualify.
