Bankrupt council denied new 9.99% tax rise

Birmingham City Council had requested it be allowed to raise council tax by 9.99% for the next financial year

Birmingham City Council has been denied permission to increase its council tax by 9.99% next year after a government request for the figure was rejected.

But the authority was allowed to raise it by 7.5% in April before it would need to hold a local referendum to seek approval for any higher increase.

The council previously stated it would not be able to set a lawfully balanced budget without the request for 9.9% being approved.

The authority's leader, John Cotton, said the government had agreed with the progress they had made to allow them to cut the planned council tax increase.

Under normal circumstances, authorities can only increase council tax by 4.99% in total without holding a local referendum.

Along with its decision on tax rises, the government also announced an increase to the funding it provides to local authorities which will be raised by 6.8% compared to the 2024-25 financial year.

In a written statement, Ms Rayner said there had been a record number of councils asking for additional council tax increases.

"We have agreed to a limited number of requests and in all cases have not agreed to the full amount requested," she said.

"Where we have agreed, it is only for councils with amongst the lowest levels of council tax, and where we expect, even after these increases, residents will still be paying less than the average compared with similar councils."

Birmingham City Council declared itself effectively bankrupt in October 2023 as it struggled to deal with equal pay claims originally estimated to total £750m.

Government-appointed commissioners were brought in and residents in the city have already seen cuts to services since then with a council tax rise of 10% for the 2024-25 financial year.

Mr Cotton said talks with the current government have been constructive.

"Following extensive talks, we've agreed that Birmingham has made sufficient progress over the last 12 months to reduce the planned council tax increase," he said.