loveMONEY opinion: soaring Council Tax requires urgent attention

New data showing how Council Tax hikes have dramatically outstripped inflation is merely the latest indication that this bill is rising too fast for many households to keep on top of. Something has to change soon.

Households need no reminding how rapidly inflation can rise. 

Which is what makes the recent revelation that Council Tax hikes have outstripped inflation by a whopping 50% over the long term all the more gobsmacking.  

Analysis by Mailonline has revealed that, between 1998 and 2023, households have forked out £11,000 more in Council Tax than would have been the case if the levy had been tied to inflation.

Had that actually happened, the typical Band D bill would be less than £1,400 a year rather than the more than £2,000 households currently have to pay.

See if you could cut your Council Tax bill

Why Council Tax is uniquely concerning

Regular readers will know that soaring Council Tax is a topic we regularly revisit here on loveMONEY.

That's because the levy represents a unique challenge to monthly budgets in that it's long been one of the biggest outlays most households face and, unlike most other taxes, it is rising dramatically each year. 

Consider the following: for the 2021/22 financial year, the typical Band D household was hit with a Council Tax hike of £81, which was followed by a hike of £65 in 2022/23.

The hike last year worked out to roughly £99 while households will have to find an extra £106 this time round.

Finances already under pressure

Now, on the face of it, Council Tax hikes might not seem like a huge deal.

For the typical Band D property, this year's hikes worked out to less than £11 a month spread over 10 months.

But of course, these hikes don't exist in isolation: in the last few years, household finances have been hammered first by the pandemic lockdowns and then by the cost of living crisis.

Many households don't have the money to cover existing bills, let alone soaring Council Tax.

We've already seen evidence of this: last Summer (the latest period data is available for) the Money Advice Trust revealed how Council Tax arrears had rocketed 69% over the last five years, and 10% in the previous 12 months. 

Given the latest dramatic hikes implemented in April, the number of people struggling will likely keep rising.

Struggling to pay your Council Tax bills? Visit this Citizen's Advice page for help

This isn’t the fault of councils

It’s worth emphasising that this problem isn’t down to the councils themselves.

It’s no secret that the funding they receive from central Government has been slashed in recent years, leaving councils already having to make difficult decisions about where they spend money and how much they charge residents.

Things can’t carry on this way

As we highlighted in this earlier article on rising Council Tax debt, things cannot carry on in this fashion.

Massive increases year after year are becoming unsustainable ‒ the Government desperately needs to review the way that it funds councils.

But we also need fresh thinking when it comes to handling the arrears that build up.

More support for Council Tax support schemes ‒ which allow some to apply for Council Tax reductions ‒ to help prevent the arrears being built up at all, would be a good start, while a more flexible approach to collecting the money owed is also badly needed.

Struggling to pay your Council Tax bills? Visit this Citizen's Advice page for help