Parish and town councils exempt council tax referendum principles

We welcome the news that parish and town councils will be exempt from council tax referendum principles for the 2025/26 financial year.

In our response to the Ministry of Housing, Communities and Local Government consultation on the provisional local government finance settlement 2025/26, we stated that we fully support the government's recommendation that parish and town councils should be exempt from excessive council tax increase referendum principles for the 2025/26 financial year. We also commented that there should be a multi-year settlement or a complete exemption in the future.

However, we argued strongly that the government had not adequately considered the £10 million cost impact of parish and town councils' non-exemption from the introduction of National Insurance Contribution employer increases in 2025/6. This would likely result in a 1.5% to 3% average increase in parish and town council precepts in the new financial year. We urge the government to rethink its decision to exclude parish and town councils from the associated compensation package.

The consultation invited views, in particular from representatives of local government, on proposals for the local government finance settlement for 2025/26. The settlement is an annual process to distribute core resources to local government and consists of grants, council tax and locally retained business rates.