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Protect local residents’ rights to veto council tax increases

We will continue to ensure that local residents can veto high increases in Council Tax via a referendum.

Our Verdict

Since 2012, local authorities, fire authorities, and Police and Crime Commissioners have been required to hold a referendum if they wish to increase council tax by more than a certain percentage. This percentage was 2% when this government came to power, and it has been increased to 3% from 2018. With the addition of a 3% allowance for councils who fund social care, the real rate that some councils can increase council tax by without holding a referendum is actually 5.99%. So the referendum rule remains, but the threshold rate has risen.

There is, of course, a conflict between councils (who need to raise money) and taxpayers (who want to be protected from council tax rises). It’s clear the referendum rule is there to protect taxpayers, but is there a threshold rate at which the referendum rule stops doing what it was designed to do? Is it 3%? Is it 10%? Is it 20%? We won’t be commenting on its effectiveness, but we’ll keep monitoring the threshold rate, which gets set by the Secretary of State each year.

In the meantime we return to the wording of the promise being made, and because the referendum rule still exists we’re marking this as ‘done’. If that changes before the end of the government’s term of office and we’ll move this to ‘broken’. We’ll also include comment from both sides of the fence (councils and residents) when we have it. Follow this policy for updates.

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