Story perspectives

Council Tax Hikes Loom as Budget Deficits Worsen

10/16/2025

Center

Councils Seek Tax Reform

Norfolk County Council faces a potential 4.99% council tax rise to cover a £25 million budget gap, despite £36 million in service cuts, mainly in adult social care.
Bristol City Council faces a £117 million deficit over five years, including a £20.8 million shortfall next year, prompting cost-cutting and higher income.
Labour MPs are pushing for a major overhaul of the council tax system, citing its outdated and regressive nature.

Left

Councils Face Funding Crisis

The Institute for Government (IfG) says English councils will be poorer by the end of this parliament than in 2010, despite Labour funding increases.
Severe funding cuts from 2010 to 2019 left local authorities reliant on emergency funding and able to provide only legally mandated services.
Birmingham, the largest local authority, faces acute financial pressure because it uses reserve funds to maintain services and has a significant budget overspend.

History

Historical Context

The Community Charge, introduced in 1990 by Margaret Thatcher's government, replaced local rates with a flat tax, leading to widespread protests and financial strain on councils, some facing deficits over £100 million. Following its unpopularity and riots, the tax was repealed in 1992, replaced by Council Tax in 1993, yet current councils like Bristol and Birmingham still face financial challenges due to funding cuts since 2010.

1 of 3

Councils Seek Tax Reform

Norfolk County Council faces a potential 4.99% council tax rise to cover a £25 million budget gap, despite £36 million in service cuts, mainly in adult social care.
Bristol City Council faces a £117 million deficit over five years, including a £20.8 million shortfall next year, prompting cost-cutting and higher income.
Labour MPs are pushing for a major overhaul of the council tax system, citing its outdated and regressive nature.

1 / 3