UK Council Tax Arrears Hit Record £7.4 Billion Amid Cost of Living Crisis
Families face rising bills as unpaid council tax debt climbs, putting pressure on the Chancellor ahead of his budget.
Unpaid council tax arrears in the UK have reached a record £7.4 billion, a significant increase of £782 million in the past year, according to figures from the Centre for Social Justice. This surge in debt occurs as households grapple with rising costs, with council tax hikes of up to nine percent implemented by some local authorities.
Households have already seen increases, with council tax for Band D homes rising by £111 to £2,392 in April. Some local authorities, such as Trafford, increased charges by 7.49 percent, while Worcestershire County Council raised theirs by 8.98 percent. Compounding these financial pressures, household gas and electricity bills have risen by four percent this month, adding an estimated £60, with predictions of further increases up to 16 percent by January 2027.
The growing arrears are expected to place pressure on Chancellor John Healey as he prepares to deliver his first budget on October 28. City experts suggest Healey may announce plans for an additional £70 billion in borrowing to cover escalating debt interest and welfare costs. The Chancellor is reportedly considering new taxes on banks and gambling firms, while potentially delaying major spending decisions in areas like defense, benefits, and social care. He has also pledged measures to ease financial burdens, including a potential cut in VAT on electricity bills and a freeze on fuel duty.
In anticipation of his budget, Healey is also set to commit hundreds of millions of pounds to the development of Artificial Intelligence, aiming to foster a "distinctively British approach" to the technology. This £600 million package is intended to mitigate AI's risks while harnessing its potential for economic growth across the UK, with Healey stating that AI could "transform daily life" and benefit various sectors.
Separately, Andy Burnham is reportedly in line to receive £7 million for a feasibility study exploring the possibility of bringing the Olympic Games to the north of England in the 2040s. This funding will support an examination of potential venues, transport links, host cities, community benefits, costs, and the viability of a bid. The Department for Housing, Communities and Local Government has been approached for comment.