Another steep council tax rise in Shropshire could be on the cards

Council tax in Shropshire could again see a steep rise.

For the current financial year (2026/27), residents saw their bill rise by a whopping 8.99 per cent after the Ministry of Housing, Communities and Local Government (MHCLG) granted permission.

That saw a Band D property’s council tax rise increase from £1,806.67 a year to £1,969.09, a rise of £16.24 a month.

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Local authorities are only allowed to raise council tax by a maximum 4.99 per cent without holding a local referendum or if they given special dispensation by the Government.

The additional four per cent increase raised an around £8.8 million in income, helping the council to reduce the amount it needed to borrow, lowering interest rates in future years.

It was part of the local authority’s exceptional financial support (EFS) application for £121 million.

However, despite that estimated requirement reducing to around £87m, the council is nowhere near out of the woods and has admitted it will need EFS for the next five years.

The draft Medium Term Financial Plan (MTFP) for 2027 to 2031 will be presented to Cabinet next Wednesday (November 18).

It effectively looks at the budget for the next financial year (2027/28) with the next report due at the beginning of February ahead of full council agreeing the budget and council tax.

The report says the current estimated budget shortfall is £108.424m, subject to further economic and budget assumptions throughout November and December, and the provisional funding settlement that will be announced next month. Therefore, the council is due to make a  EFS request for that figure.

It will also have the opportunity to make an application to MHCLG to increase the council tax rate over and above the 4.99 per cent cap for the 2027/28 financial year.

The “best-case model” it says includes another increase of 8.99 per cent, which would bring the Band D council tax to £2,146.11 a year – providing the council with an additional £9.741m in income, reducing the EFS requirement to £97.375m.

The report adds that, in the current financial emergency, the Section 151 Officer will be making the recommendation to council that, in the event of MHCLG giving dispensation, it should raise council tax to the maximum possible level.

If it was only allowed to raise it by 4.99 per cent, a Band D property would contribute £2,067.35 a year.

That places Shropshire 12th out of 15 when ranked against statistical neighbours, only above East Riding of Yorkshire, North Somerset, and Bath and North East Somerset.

A Band D property in Northumberland, for example, would contribute £2,500.86 a year if council tax there was raised by 4.99 per cent, while in nearby Herefordshire, it would be £2,170.80 – over £100 more than in Shropshire.

Speaking to a media briefing ahead of the report being published, Duncan Whitfield, Shropshire Council’s Section 151 Officer and corporate director for finance and governance, said the authority actually asked for an additional 10 per cent rise in council tax above the cap last year. The Government however only granted four per cent.

“And that was one of the higher applications in the country,” said Mr Whitfield.

“The reality of the situation is, given the shift towards local taxation over government grants, it’s an inevitability that council tax needs to be moved above as far as it can, given the opportunity.”

Mr Whitfield added that, while the report looks beyond the 2027/28 financial year, the crystal ball is “getting hazier”.

“We’re halfway through the funding settlement period, but the fuel crisis continues, the cost of living looks like it’s going in the wrong direction, and it looks very murky,” he said.

“So just concentrating on 27/28, we’ve looked at all our assumptions, and not many of them are going positively. Certainly inflation and pay look very uncertain at the moment.

“Debt financing is ironically looking better because we paused the capital programme and we also borrowed less than we intended to.

“But we’ve got more worries and concerns about specific grants and settlements.”