Residents of large council areas in England could face council tax increases of up to £250 a year if proposals to create so-called "mega councils" go ahead, analysis by local government bodies shows.
Research from the District Councils' Network found the average Band D council tax bill in areas with populations above 500,000 stood at £2,009, compared with £1,759 in smaller council areas — a difference of about £250. The analysis was published as the Department for Housing, Communities and Local Government (MHCLG) pushes plans for structural reorganisation that critics say risk higher bills for town and country dwellers alike.
MHCLG, while led by Labour's Angela Rayner, ordered councils in 21 two-tier areas — largely in southern England and the Midlands — to draw up proposals for merger into unitary authorities. Those new bodies were told to consider arrangements serving populations of 500,000 or more, although the department has indicated smaller options could be considered. The ministry is reported to remain committed to the reorganisation despite Rayner's resignation earlier this year after she admitted underpaying stamp duty on a seaside home.
Supporters of reorganisation say unitary authorities can simplify delivery and cut duplication between county and district councils. Opponents say the mergers risk distancing decision-making from local communities and may increase costs. Sam Chapman-Allen, chairman of the District Councils' Network, said the evidence suggests large unitary councils "land their residents with bigger council tax bills."
Conservative local government spokesman Sir James Cleverly criticised the approach as "top-down restructuring" that disregards local geography and identity and said there was "no evidence this approach will deliver better services." He warned families could be faced with higher bills as a result.
An MHCLG spokesman said councils set their own tax levels and noted the existence of a referendum threshold for proposed increases, adding: "Councils decide their own tax levels every year with a referendum threshold for proposed increases in place to protect taxpayers. The research cited has clearly misunderstood this basic concept."
The District Councils' Network figures come after almost all English town halls raised council tax by the maximum 5 percent permitted without triggering a referendum this year, notwithstanding a 2023 pledge by Labour leader Sir Keir Starmer to freeze council tax. That round of increases has taken the average household bill to about £2,280.
Local government leaders in rural and suburban areas have warned that other funding changes outlined by MHCLG — intended in part to direct resources toward cities with acute housing and service pressures — could leave shire and rural councils with tighter budgets and compel them to raise bills by the maximum allowed.
Officials leading the reorganisation programme have said the goal is to create simpler, more accountable structures able to deliver services more efficiently. Details of proposals from the affected 21 two-tier areas have been sought by the department and, in many places, are being developed through cross-council working groups and consultations with local stakeholders.
The debate over reorganisation comes amid wider scrutiny of public spending and local government finance as central and local authorities seek to balance rising demand for services with constrained funding. Any formal proposals to merge councils would be subject to further consultation, statutory processes and, in some cases, ministerial approval.
If ministers proceed with the 500,000-population model, the District Councils' Network analysis indicates that residents in the newly created authorities could, on average, see higher council tax bills than those in areas keeping smaller, more local structures. Proponents stress potential savings from scale and streamlined governance; opponents and some local leaders say those benefits are not proven and could be outweighed by reduced local representation and higher household costs.
Ministers and council leaders now face the task of balancing potential efficiencies against local finances and community concerns as plans move from options and proposals toward formal decisions.