Shropshire Council 'unlikely' to be able to increase council tax above 4.99 per cent

In England, unitary and county authorities can only increase council tax by up to 4.99 per cent without holding a local referendum. That comprises 2.99 per cent for general use and 2 per cent for social care.

However, there are circumstances in which the Government can allow a council to increase it beyond that amount without holding a referendum if it is facing severe financial pressure.

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.

Projections at one stage indicated that the authority would have an overspend of around £50 million by the end of this financial year (March 2026). The council is facing an estimated budget gap of £130 million for 2026/27, which is why it has applied for exceptional financial support (EFS) from the Government for that figure.

The Ministry of Housing, Communities and Local Government is due to confirm its decision by the middle of this month, with Shropshire Council confident that the request will be granted.

Speaking to the media on Tuesday (February 3), interim chief executive Tanya Miles said that, in the application for EFS, one question faced was around increasing council tax above 4.99 per cent.

“We have asked if we can do that for one year, but we’re not sure where ministers sit at the moment in terms of local authorities increasing council tax above the 4.99 per cent,” she said.

“So our ask at the moment is to borrow up to the £130 million, because that is our overall gap. If we are able to increase our council tax for one year, that will reduce our borrowing cost.”

However, Councillor Heather Kidd, the leader of Shropshire Council, said the Government “doesn’t seem keen at the moment” to give local authorities that ability.

“They will do it on a case-by-case [basis] but certainly early on, they weren’t keen to give people an uplift in their council tax above the 4.99 [per cent],” said Councillor Kidd.

“It may be they look at us and think ‘we’re in such a serious position’ which we are, and they give us that opportunity. But we’re sitting here thinking they won’t. If they do, then we will have to have those conversations.”