UK Council Tax Arrears Hit Record High Amidst Cost of Living Crisis

Unpaid council tax arrears in the UK have surged to a record £7.4 billion, driven by families struggling with the escalating cost of living and local authority tax increases of up to nine percent. The figures, revealed by the Centre for Social Justice, show a £782 million increase in council tax arrears over the past year.

This rise places pressure on Chancellor John Healey, who is set to present his maiden budget on October 28. Households have already seen an increase in their bills, with council tax for Band D homes rising by £111 to £2,392 in April. Some local authorities imposed significantly larger increases, such as Trafford, which raised charges by 7.49 percent, and Worcestershire County Council, which increased its council tax by 8.98 percent.

Shadow housing minister Gareth Bacon criticized the situation, stating, "Council tax is spiralling out of control under Labour, with families facing ever-rising bills." He added, "It is little wonder that more and more people are struggling to pay. Hardworking people are dealing with rising prices, rising energy bills and rising costs at the pump, yet all Labour can offer is tax, tax, tax. They are hiking up ordinary people's council tax and adding extra costs on top through their new family homes tax."

Further adding to household financial burdens, UK gas and electricity bills have risen by four percent this month, an additional £60. These costs are predicted to increase by another 16 percent, amounting to an extra £276 by January 2027.

Chancellor Healey is expected to announce plans for an additional £70 billion in borrowing to cover rising debt interest and welfare costs. City experts have warned that the Chancellor may postpone major spending decisions on defense, benefits, and social care in his budget, opting instead to impose higher taxes on banks and gambling firms. Healey has also pledged to provide relief to households and businesses by cutting VAT on electricity bills and freezing fuel duty.

In his budget, Healey is also anticipated to commit hundreds of millions of pounds to Artificial Intelligence (AI), aiming to develop a "distinctively British approach" to the technology. This £600 million package is intended to mitigate AI risks while harnessing its potential for economic advantage across the UK, with Healey stating that AI could "transform daily life" and benefit various sectors of the economy.

Separately, Andy Burnham is expected to receive £7 million in taxpayer funding for a feasibility study into bringing the Olympic Games to the north of England in the 2040s. The study will examine potential venues, transport links, host cities, community benefits, costs, and the viability of any bid.