The government has denied Hampshire County Council’s request for a 15% tax increase, impacting their budget plans.
Hampshire: The government has turned down Hampshire County Council’s request for a 15% council tax increase. This decision affects their financial plans.
The government recently shared its final statement for local councils. They confirmed which exceptional financial support requests were accepted.
Many councils, including Hampshire, wanted to raise council tax beyond the usual 5% limit. However, only six councils received approval for support, and Hampshire was not among them.
In December, Hampshire County Council requested this increase due to a significant budget deficit. They expect a £182 million shortfall in 2025/26, rising to £266 million by 2026/27.
If the government had approved the request, it would have helped avoid using reserves over the next two years. The increase would have generated £83.5 million in additional income for 2025/26.
On Monday, the government stated that they evaluate requests for financial support on a case-by-case basis. They emphasized that not all requests would be granted.
Deputy Prime Minister Angela Rayner mentioned that decisions were made carefully. She acknowledged the need for limited increases to help councils but stressed the importance of considering taxpayers’ interests.
She added that where increases were allowed, they were for councils with the lowest tax levels. Even with these increases, residents would still pay less than average compared to similar councils.
For the 2025 to 2026 Settlement, specific council tax referendum principles will apply to several councils, including Birmingham and Bradford.
Hampshire has the second-lowest council tax level in the country. They previously froze it for five years between 2011 and 2016.
Nick Adams-King, the leader of Hampshire County Council, expressed confusion over the government’s decision. He stated it doesn’t make sense, especially since they followed the government’s guidance.
He pointed out that the council’s financial situation is worsening due to rising costs and insufficient funding. He believes local government funds are being redirected to other areas.
Adams-King warned that this decision could lead to further service cuts. The council will continue to use its reserves, but this is not a sustainable solution.
He compared using reserves to taking out a mortgage for groceries, saying it can’t last. The government’s stance is creating an intolerable situation for the council.
Since the request was denied, the council plans to propose a 4.99% tax increase. This would mean balancing the 2025/26 budget by drawing £68.2 million from reserves.
The cabinet will discuss the council’s position on Tuesday, February 4.
