NALC welcomes government plans not to extend council tax referendum principles to local councils

The National Association of Local Councils (NALC) has welcomed government proposals not to set council tax referendum principles for England's 10,000 local (parish and town) councils for the financial year 2023/24.

The Department for Levelling Up, Housing and Communities published the Provisional Local Government Finance Settlement 2023/24 on 19 December 2022. This confirms that the government does not propose to extend to local councils the requirement to hold a referendum on increases to their precepts, which are their small share of council tax.

The relevant sections from the consultation are below:

3.2 Council tax referendum principles

3.2.1 The government proposes the following package of referendum principles for 2023/24, which will be subject to the approval of the House of Commons alongside the final local government finance settlement:

• Protecting local taxpayers from excessive increases in council tax by setting the referendum threshold at 3% per year from April 2023 for shire counties, unitary authorities, London boroughs, and the Greater London Authority without a local referendum. Councils can set higher increases if they wish via consent of a local referendum. 
• In addition, local authorities with social care responsibilities will be able to set an adult social care precept of up to 2% per year without a referendum. 
• A bespoke council tax referendum principle of up to 3% or £5, whichever is higher, for shire districts. 
• A bespoke additional council tax flexibility of up to £20 on Band D bills for the Greater London Authority, as requested by the Mayor of London.
• Setting no council tax referendum principles for mayoral combined authorities (MCAs).
• Setting no council tax referendum principles for town and parish councils.
• A £5 referendum principle on Band D bills for all fire and rescue authorities. A £15 referendum principle on Band D bills for police authorities and police and crime commissioners. 

3.2.2 It is for individual authorities to determine whether to use the flexibilities detailed above.

3.5 Council tax referendum principles for town and parish councils

3.5.1 The government has not previously set referendum principles for town and parish councils. This approach was contingent on town and parish councils taking all available steps to mitigate the need for council tax increases and the Government seeing clear evidence of restraint.

The final settlement is due for publication in early 2023 and will be debated and agreed upon by the House of Commons.

Cllr Keith Stevens, NALC chair, said: "I am pleased ministers have listened to NALC's call that the first tier of local government in England – the 10,000 local (parish and town) councils – be not required to hold a referendum over increases to their budgets in 2023/24. However, I urge the government to go further through a multi-year exemption. This would provide much-needed certainty and allow local councils to plan for the future and continue to support their communities through these challenging times.

“It is also important to recognise that the government does not provide funding to local councils as residents almost entirely fund their services and activities. I will continue to work with ministers to ensure the financial challenges facing local councils and their communities are better understood and addressed, including through direct access to government grant funding programmes.”

Read the Provisional Local Government Finance Settlement 2023 to 24