Shropshire residents could see council tax hiked by NINE per cent as cash-strapped council gets special permission
Residents in Shropshire may face up to a nine per cent hike in council tax from April after a council was granted permission by the Government to increase tax bills in the county beyond the 5 per cent limit.
Shropshire Council declared a financial emergency in September to avoid a section 114 notice being issued, which would effectively mean the council declaring itself bankrupt.
Authorities set their own council tax but local government rules mean authorities normally have to hold a referendum if they wish to increase tax bills beyond the limit - unless they seek permission from the Government.
Last week the authority said it was “unlikely” that it would be given special permission to increase council tax by more than the current maximum of 4.99 per cent.
But the cash-strapped unitary authority is among seven councils that have now been granted permission to increase their council tax beyond the core limit, without a referendum, to ease a “challenging financial position”, the Government has announced.
It is part of a three-year settlement for local authorities which the Government has finalised, making around £78 billion available throughout England.
Local government minister Alison McGovern has said the deal was designed around “reconnecting funding with need”.
She said Shropshire, Worcestershire and North Somerset councils can raise their share by a maximum nine per cent.
Meanwhile authorities in Trafford, Warrington and Windsor and Maidenhead can raise their share by up to 7.5 per cent and Bournemouth, Christchurch and Poole Council can raise its share by up to 6.75 per cent.
“Our local government finance reforms get money to where it is needed, but we recognise that some councils remain in a challenging financial position as they continue to deal with the legacy of the previous system,” Ms McGovern said in her written statement.
She later added: “These additional flexibilities are a limit, not a target. Decisions on council tax levels are for local authorities.”
She continued: “We are reconnecting funding with need.
“Only around a third of councils were given the funding to broadly match their assessed need before our reforms.
“By the end of the multi-year settlement, that will be nine in 10 councils.
“As a result of these changes, the most deprived places will receive 45 per cent more funding per head than the least deprived in 2028/29.”
The package will include a £440 million uplift to the recovery grant, “aimed at the councils most impacted by cuts during austerity”, bringing its total to £2.6 billion.
It will also include £272 million additional allocations within a homelessness, rough sleeping and domestic abuse grant, bringing its total to £2.7 billion.
Ms McGovern said: “We promised to reconnect funding to deprivation and this final settlement delivers on that promise.
“With more new funding, we’re giving councils the certainty they need to plan ahead and transform services.
“Our purpose is to support families, tackle homelessness before it happens, and finally giving communities worst affected by historic cuts their fair share.”
What does Shropshire Council say?
Despite the permission for the council tax hike, Shropshire Council said it was "disappointed" by the funding settlement agreed by the Government.
It said the proportion of older people in the county is much higher than the national average (26.4 per cent in Shropshire compared with 18.7 per cent in England in 2024). The gap in funding is being increased further by price increases for delivering services in a rural, sparse county, and periods of very high inflation, well above average inflation for many local authority services, such as residential homes for children.
The council added that the final settlement means the authority will receive £4.3 million less in 2026/27 than previously planned in its draft Medium Term Financial Plan published in October 2025.
Any decision on increasing council tax to is set to be made by full council later this month as part of the council’s budget-setting process.
Liberal Democrat Councillor Heather Kidd, leader of Shropshire Council, said: “The Government has let Shropshire down again with this funding settlement, despite repeated promises to address the long‑standing gap between rural authorities and our urban counterparts. This latest reduction in government support deepens the structural deficit we are already facing and places even greater pressure on our ability to deliver essential services.
“We are now £4.3 million worse off in next year than projected in October. Ministers have ignored the significantly higher cost of delivering services in a large rural county and have removed funding for remoteness factor. The consequences for rural services will be stark.
“Yesterday we were given permission by the Government to increase council tax by up to 4 per cent, although this is a decision which will be considered and made by full council later this month.
“If this were to be approved, an 8.99 per cent increase would generate an extra £8.8 million in much‑needed income. However, even with this additional revenue, the financial challenges we face remain significant. Inflation, rising costs, and growing demand - particularly within social care - continue to increase year on year. Council tax alone cannot keep pace with these pressures, and ongoing reductions in government funding widen the deficit further.
“In reality, this leaves us with no choice but to borrow up to £121 million from the Government as part of our Exceptional Financial Support ask, significantly increasing our long‑term debt.
“With limited ability to increase our core spending power and more statutory duties being passed to councils without the funding to deliver them, borrowing remains the only option to bridge the immediate gap.”
