- Insights
Millions face council tax rise of more than 5%
Millions face council tax rise of more than 5%
Following the UK government’s approval of a significant rise in council tax, over two million people will face an increase of 5-10% in their council tax bills, surpassing the usual cap.
It is understood that the government has authorized six local councils to raise council tax beyond the standard 5% threshold without holding a referendum. Among them, Windsor and Maidenhead Council and Newham Council will see a 9% increase, Bradford Council will rise by 10%, while Birmingham, Somerset, and Trafford councils will each experience a 7.5% hike.
Deputy Prime Minister and Local Government Secretary Angela Rayner confirmed that council tax will rise across the UK this year. However, she emphasized that the average increase will not exceed last year’s 5.1% level.
Additionally, the government will allocate over £69 billion in central funding to local authorities, marking a 6.8% increase compared to 2024-25. Nearly £4 billion will be set aside to help councils provide social welfare services and ease financial burdens.
Most of London’s 33 borough councils have already announced changes to council tax bills effective from April 2025. According to draft budget plans, the majority of councils—including Bromley, Greenwich, Havering, Islington, Hammersmith & Fulham, Haringey, Richmond, Tower Hamlets, and Westminster—will implement increases close to 5%.
However, the Conservative-led Kensington and Chelsea Council will raise council tax by 4% and provide a one-off £50 grant to 15,000 low-income residents to help ease the cost-of-living burden.
Overall, under the new increases, many London households will be paying over £2,000 annually in council tax.
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Tories would propose raising the threshold for skilled worker visa holders to apply for definite leave to remain (ILR) to 10 years.
In a major policy announcement last week, the Conservative Party proposed extending the threshold for applying for indefinite leave to remain (ILR) on a work visa from the current five years to ten years. Applicants would also be required not to have been illegal immigrants, refugees, or recipients of social housing benefits.
Conservative leader Kemi Badenoch stated that the policy aims to ensure that legal migrants’ salaries and tax contributions are “high enough” to exceed any benefits they could receive in the UK.
Under this proposal, most low-skilled foreign workers, including those earning minimum wage, would be excluded from applying for permanent residency. Additionally, any migrant who enters the UK illegally—whether by crossing the English Channel in small boats or overstaying their visa—would be automatically barred from applying for permanent residency, even if their asylum application is eventually approved and they are legally recognized as refugees.
Currently, migrants can apply for citizenship 12 months after obtaining ILR. However, the Conservative Party also suggested changing this rule, requiring migrants to wait an additional five years after securing ILR before applying for citizenship.
According to the latest data from the Office for National Statistics (ONS), over the past decade, more than one million migrants have successfully obtained ILR, granting them access to social housing, benefits, and other public funds. As of September 2024, the number of ILR approvals has increased by one-third to 147,053, with 36% on work visas, 28% on spouse or family visas, and 24% as refugees.
The Conservative Party justified the proposal by stating: “The pace of migration is too fast, and the numbers are too high to achieve meaningful integration. We need to slow down the process of granting legal citizenship. A British passport should be a privilege, not an automatic right.”
Last week, the ONS projected that, based on current trends, 9.9 million migrants are expected to move to the UK for work and residence over the next decade.
Immigration pressures have also become a major concern for the ruling Labour Party. A YouGov poll revealed that 56% of respondents believe Labour’s current immigration policies are “not strict enough.” This has led to the formation of a parliamentary group urging Prime Minister Keir Starmer to take a tougher stance on immigration.
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Bank of England cuts interest rates to 4.5% and slashes UK growth forecast
The Bank of England has announced a reduction in interest rates from 4.75% to 4.5%, the lowest level in 18 months. Additionally, the central bank has halved its economic growth forecast for the UK this year, now predicting a 0.75% growth rate for 2025, down from the previous 1.5% estimate.
While the bank downgraded its growth forecast for this year, it raised projections for 2026 and 2027. The economy is now expected to grow by 1.5% in both years, up from the earlier forecast of 1.25%.
Governor Andrew Bailey indicated that further interest rate cuts are likely but emphasized that “due to increased uncertainty, we must assess the pace and extent of rate cuts on a meeting-by-meeting basis.”
The Bank of England’s analysis warns that inflation could rise sharply later this year due to factors such as increased energy and water bills and potential trade tariffs from the United States. The inflation rate—measuring the pace of price increases—is now expected to reach 3.7% and will not return to the 2% target until the end of 2027.
The latest rate cut will provide relief for 629,000 homeowners with tracker mortgages, which move in line with the base rate, typically reducing their monthly payments by around £29. Those with standard variable rate (SVR) mortgages will have to wait to see if their lenders follow suit.
Meanwhile, those on fixed-rate mortgage deals will not see immediate changes but may find more competitive options available for new and renewing borrowers. However, the rate cut is expected to reduce returns for savers.
