Keir Starmer tells councils to pick up the bill for Labour's spending commitments

Independent

16-06-2025

Keir Starmer has handed councils the bill for paying for the black hole in UK finances amid warnings of the biggest rises in local taxation in two decades.
The prime minister told journalists on a trip to the G7 summit in Canada that it is up to councils if they want to charge the full 5 per cent increase amid concerns that he has unleashed a series of massive tax rises.
As a result of last week's spending review councils can increase the council tax by up to 5 per cent while the police have also been given the powers to use a similar rise in their precept to raise extra funds. The Institute of Fiscal Studies (IFS) has already warned of the biggest rise in council tax for two decades.
The row comes after Deputy Prime Minister Angela Rayner and Home Secretary Yvette Cooper both led holdouts in the Treasury negotiations on the spending review.
There were fears that despite added demands and pressures the Ministry of Housing, Communities and local Government (MHCLG) and the Home Office would be forced to endure cuts.
Now the funding holes appear to be open to be filled through the council tax just a month after voters turfed out Labour from county councils in favour of Reform UK.
While Sir Keir and Chancellor Rachel Reeves have vowed not to increase taxes on 'working people' this was limited to income tax, employee national insurance contributions and VAT, not local taxation.
The move is reminiscent of tactics used by Tony Blair in the last Labour government as they held back on income tax rises but allowed huge double figure increases in the council tax.
Challenged about this on the flight to canada, Sir Keir said: 'The first thing is council tax rises are obviously for councils to decide, year on year, which is what they all do. What the Spending Review did was if you like usher in the next phase of this government.
'We spent the best part of the first year taking the tough but necessary decisions in relation to, not just our broken economy but everything was broken, I could go on for the rest of this journey just listing things that were broken.
'Nobody actually argues with that, they might say that it your job to get on and fix it, but nobody argues that it's broken. Year one was cleaning up that mess, stabilising the economy and creating the conditions for the spending review. The spending review now allows us to show what a difference a Labour government makes.'
He also indicated that he now believes there is a 'Starmerism' approach to government.
He said: 'What the spending review shows is that because of the decisions we've made, now you can see what difference a Labour government makes. And this is very 'Starmerite' if you like, those phases, I did it in opposition through to the election. The first job is always to clear out, clear up, and then move on from there. That's the stage that is ushered in by the spending review, into the next phase.'
The Lib Dems' spokesperson for housing, communities and local government, Vikki Slade, said: 'Local government budgets have been left stretched to breaking point, after the former Conservative government failed to fix the crisis in social care and made councils do more and more with less and less.
'Passing the buck to local government and asking hard-pressed households to shoulder the burden of mounting council tax bills is deeply unfair. Instead, the government must come forward with a proper plan to end the crises in social care and SEND provision which are pushing councils close to collapse, and get serious about kickstarting economic growth to secure the vital revenue that our public services need."
A spokesperson for the Local Government Association, which represents councils across England, said: 'All councils remain under severe financial pressure. Many will continue to have to increase council tax bills to try and protect services but still need to make further cutbacks.
'Council tax is not the solution for meeting long-term pressures facing high-demand national services. An increase in council tax of up to 5 per cent will place a significant burden on households. In addition, increasing council tax raises different amounts of money in different parts of the country not related to need.'