Local government reorganisation proposals that would create unitary authorities covering populations of 500,000 or more could leave some residents in southern and midland England facing council tax increases of up to £250 a year, according to analysis published by the District Councils' Network.
The analysis found that the average Band D council tax bill in authority areas with populations above half a million stands at £2,009, compared with an average of £1,759 in smaller councils. The difference, the network said, suggests larger merged councils are associated with higher bills for services in many parts of the country.
The Ministry of Housing, Communities and Local Government (MHCLG) under Angela Rayner proposed creating "simpler structures" for local government last year and directed town halls in 21 two-tier areas — mainly in southern England and the Midlands — to draw up options for merging into unitary authorities. Ms Rayner resigned from the department earlier this year after acknowledging she had underpaid stamp duty on a property.
Officials at the department have indicated that work on local government reorganisation will continue despite her departure, with some proposals envisaging new authorities that would cover half a million residents or more. Local council leaders and Conservative opponents have described the potential changes as "mega councils."
Sam Chapman-Allen, chairman of the District Councils' Network, said the expectation that reorganisation would cut costs was not borne out by the data. "We're told that reorganisation should cut costs, but the evidence shows huge unitary councils, like those the Government envisages, land their residents with bigger council tax bills," he said.
Conservative local government spokesman Sir James Cleverly criticised the approach and argued it could impose higher bills while ignoring local identities. "Labour always thinks bigger government means better government," he said. "In reality, it means top-down restructuring that ignores local opinion, tramples over geography and identity, and lands families with higher bills, while there has been no evidence this approach will deliver better services."
The District Councils' Network data also highlighted recent council tax rises. Almost all town halls raised council tax by the maximum allowed 5 percent this year, which the analysis said pushed the average bill to about £2,280. The network and some local leaders have warned that a combination of national funding decisions and reorganisations could force rural councils to increase bills further, potentially to the maximum levels permitted without triggering a local referendum.
An MHCLG spokesman said councils set their own tax levels and are subject to a referendum threshold for proposed increases. "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 spokesman said.
Officials have argued that unitary structures can offer clearer lines of responsibility and savings through reduced duplication of services, but evidence on net tax impacts has been mixed and varies by area. Advocates of reorganisation say larger authorities can achieve economies of scale and more coherent strategic planning, while critics point to potential losses of local accountability and transitional costs.
The 21 two-tier areas asked to submit merger plans encompass a mix of urban, suburban and rural communities where some services are currently split between county councils and district councils. Proposals produced to date have included options for both large unitary councils and smaller alternative arrangements, and the final shape and scale of any reorganisation will depend on decisions by ministers and consultations with local authorities.
Local government finance experts caution that predicting precisely how mergers will affect individual households is complex. Factors include differences in pre-merger spending levels, service standards, council tax bases, and transitional costs such as harmonising pay and pension arrangements. Some residents in newly merged areas could see bills rise if the new authority chooses to level up charges to the higher pre-merger standard.
The reorganisation debate adds to wider discussions about local government funding, council tax fairness and the balance between central direction and local choice. Ministers say restructuring aims to simplify arrangements and improve service delivery, while local leaders and opposition politicians dispute whether the proposed model would deliver the promised benefits without additional cost to residents.
Any concrete changes will depend on the outcome of the MHCLG process, subsequent statutory decisions and, where required, local referendums on council tax increases. Authorities preparing merger proposals say they will publish options and consult with residents as plans progress.