Embargoed: 22:30 Monday, 3rd March 2025
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Almost half, or 47.2 per cent, of councils that published their accounts for 2023-24 increased their financial reserves despite raising council tax.
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59.5 per cent of local authorities in the East Midlands reported an increase in usable reserves from March 2023 to March 2024, the most of any region.
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Three councils had over £10,000 in usable reserves per resident - The city of London (£31,414), Shetland Islands (£17,548) and Orkney Islands (£11,512).
- A full regional breakdown is included below.
New research from the TaxPayers’ Alliance (TPA) has revealed that 47.2 per cent (150 out of 318) of councils which published accounts for 2023-24 saw an increase in their usable reserves during the period, while 52 councils saw increases in both 2022-23 and 2023-24. Local authority leaders had previously claimed to be drawing down their reserves in order to stay solvent.
This comes as town halls prepare to sign off on budgets that are expected to impose above-inflation tax hikes on households across the country as well as swingeing cuts to services. Under the local government finance settlement councils in England were given the power to increase council tax by up to 5 per cent without a referendum, in addition to a 6.8 per cent increase in government grant funding. Six councils were given higher referendum caps following requests despite none of them - Somerset, Trafford, Windsor and Maidenhead, Birmingham, Newham and Bradford - appearing in the bottom twenty of council reserves per resident.
Council reserves fall into two categories: usable and unusable. Usable reserves are additionally divided into funds that can only be used for certain purposes (ringfenced), but at least part of these funds can be used to freeze, cut, or limit council tax increase (unallocated reserves).
The council which saw the greatest increase in usable reserves was Epping Forest by £86 million in 2023-24. This was attributed to a major sale of land at North Weald Airfield which raised £88.2 million in capital receipt. The second largest increase was by Milton Keynes, by £78.8 million or 29 per cent, in 2023-24. In that same period council tax rose by 4.99 per cent.
Three councils had usable reserves per resident in excess of £10,000. These were the city of London (£31,414), Shetland Islands (£17,548) and Orkney Islands (£11,512). A further four councils had between £2,000 and £4,000 in usable reserves per resident: Westminster (£3,248), Isles of Scilly (£2,928), Wandsworth (£2,354) and Tower Hamlets (£2,005).
Council tax across England, Scotland, and Wales increased on average by 3.92 per cent in 2023-24. Two councils, East Cambridgeshire and South Norfolk managed to freeze council tax in 2023-24 and increase their usable reserves by £2.4 million and £8.3 million respectively.
The TPA is calling for a number of reforms to local government finances including greater transparency for residents to understand how their taxes are being spent, an expansion of the referendum criteria to curb the excessive accumulation of reserves, and giving councils more flexibility for how they use those reserves.
CLICK HERE TO READ THE FULL RESEARCH
Key findings:
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150 of 318, or 47.2 per cent of councils that published their accounts for 2023-24, saw an increase in their usable reserves between March 2023 and March 2024.
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Nine councils saw an increase in reserves of over £50 million.
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12 councils saw an increase of between £20 million and £50 million.
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30 councils saw an increase of between £10 and £20 million.
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59 councils saw an increase in usable reserves in both the previous financial year (March 2023 to March 2024) and the year before that (March 2022 to March 2023).
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For local authorities that published 2023-24 accounts, overall total usable reserves fell from £48.2 billion in March 2023 to £47 billion in March 2024, a 2.56 per cent decrease.
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59.5 per cent of local authorities in the East Midlands reported an increase in usable reserves from March 2023 to March 2024, the most of any region. In contrast, only 17.6 per cent of Welsh councils reported an increase in usable reserves during that period, the fewest of any region.
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Epping Forest saw the largest increase in usable reserves, which grew by £86 million or 253 per cent from March 2023 to March 2024. This was attributed to a major sale of land at North Weald Airfield which raised £88.2 million in capital receipt.
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The second largest increase was by Milton Keynes, where usable reserves grew by £78.8 million or 29 per cent, from March 2023 to March 2024. In that same period council tax rose by 4.99 per cent.
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Of councils that saw their usable reserves increase in both March 2022 to March 2023 and March 2023 to March 2024:
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Staffordshire saw the largest increase in usable reserves from March 2022 to March 2024, growing by £114.4 million or 26 per cent.
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This was followed by Oxfordshire which saw usable reserves increase by £73.2 million or 16.9 per cent from March 2022 to March 2024.
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Usable reserves per resident
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Local authorities had an average of £779 in usable reserves per resident as of March 2024.
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Three councils had over £10,000 in usable reserves per resident. The city of London (£31,414), Shetland Islands (£17,548) and Orkney Islands (£11,512).
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Four councils had between £2,000 and £4,000 in usable reserves per resident. Westminster (£3,248), Isles of Scilly (£2,928), Wandsworth (£2,354) and Tower Hamlets (£2,005).
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16 councils had less than £200 in usable reserves per resident.
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London was the region with the highest average usable reserves per resident, £2,152.
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This was followed by Scotland where average usable reserves per resident was £1,718, and Wales where it was £722.
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Three regions had average usable reserves of less than £500 per resident, the East Midlands (£455), East of England (£454) and West Midlands (£447).
Council tax
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Council tax across local authorities in England, Scotland and Wales increased by an average of 3.92 per cent in 2023-24.
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Croydon (14.99 per cent), Thurrock (9.99 per cent) and Slough (9.99 per cent) saw the largest increases in council tax in England – all three have failed to publish their 2023-24 accounts.
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Of local authorities that saw their usable reserves increase in both March 2022 to March 2023 and March 2023 to March 2024:
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Conwy saw the largest cash terms increase in council tax, which rose by £161 or 8.91 per cent in 2023-24. In that same period, usable reserves grew by £8.5 million or 17 per cent.
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This was followed by Powys which saw council tax rise by £100 or 5.5 per cent in 2023-24. In that same period, usable reserves grew by £1 million or 1.23 per cent.
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Next was Salford where council tax rose by £89 or 4.99 per cent in 2023-24. In that same period usable reserves grew by £22.3 million or 6.55 per cent.
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Two councils managed to freeze council tax from 2022-23 to 2023-24 while also increasing usable reserves from both March 2023 to March 2024 and March 2022 to March 2023.
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East Cambridgeshire saw usable reserves rise by £2.4 million or 8.9 per cent, while South Norfolk saw usable reserves rise by £8.3 million or 18.3 per cent from 2023 to 2024.
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CLICK HERE TO READ THE FULL RESEARCH
Shimeon Lee, policy analyst of the TaxPayers' Alliance, said:
"Local taxpayers will rightly be concerned that some councils are filling their coffers at the expense of residents.
“For many years, town halls have consistently increased council tax and justified the rises with claims of financial hardship. These figures reveal that a significant number of local authorities are hoarding cash while local people struggle to make ends meet.
“Ministers must look to curb the practice of building excessive reserves while councils need to provide greater transparency for their residents and keep tax rises to a minimum.”
TPA spokespeople are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)
Regional breakdown
In the East Midlands:
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59.5 per cent, or 22 out of 37, councils increased their usable reserves, with the average council holding £455 in usable reserves per resident in 2023-24.
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The council in the East Midlands with the largest usable reserves per resident was Leicester in 2023-24 with £1,265.
In the East of England
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48.7 per cent, or 19 out of39, councils increased their usable reserves, with the average council holding £454 in usable reserves per resident in 2023-24.
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The council in the East of England with the largest usable reserves per resident was Norwich in 2023-24 with £1,123.
In London
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50 per cent, or 15 out of 30, councils increased their usable reserves, with the average council holding £2,152 in usable reserves per resident in 2023-24.
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The council in London with the largest usable reserves per resident was the City of London in 2023-24 with £31,414.
In the North East
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33.3 per cent, or 4 out of 12, councils increased their usable reserves, with the average council holding £644 in usable reserves per resident in 2023-24.
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The council in the North East with the largest usable reserves per resident was Northumberland in 2023-24 with £1,017.
In the North West
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45.5 per cent, or 15 out of 33, councils increased their usable reserves, with the average council holding £541 in usable reserves per resident in 2023-24.
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The council in the North West with the largest usable reserves per resident was Salford in 2023-24 with £1,278.
In Scotland
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59.3 per cent, or 16 out of 27, councils increased their usable reserves, with the average council holding £1,718 in usable reserves per resident in 2023-24.
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The council in Scotland with the largest usable reserves per resident was Shetland Islands in 2023-24 with £17,548.
In the South East
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47.5 per cent, or 29 out of 61, councils increased their usable reserves, with the average council holding £516 in usable reserves per resident in 2023-24.
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The council in the South East with the largest usable reserves per resident was Portsmouth in 2023-24 with £1,604.
In the South West
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38.5 per cent, or 10 out of 26, councils increased their usable reserves, with the average council holding £527 in usable reserves per resident in 2023-24.
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The council in the South West with the largest usable reserves per resident was the Isles of Scilly in 2023-24 with £2,928.
In Wales
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17.6 per cent, or 3 out of 17, councils increased their usable reserves, with the average council holding £722 in usable reserves per resident in 2023-24.
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The council in Wales with the largest usable reserves per resident was Gwynedd in 2023-24 with £1,077.
In the West Midlands
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58.3 per cent, or 14 out of 24, councils increased their usable reserves, with the average council holding £447 in usable reserves per resident in 2023-24.
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The council in the West Midlands with the largest usable reserves per resident was Walsall in 2023-24 with £971.
In Yorkshire and the Humber
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25 per cent, or 3 out of 12, councils increased their usable reserves, with the average council holding £697 in usable reserves per resident in 2023-24.
- The council in Yorkshire and the Humber with the largest usable reserves per resident was Barnsley in 2023-24 with £1,278.
Media contact:
Elliot Keck
Head of Campaigns, TaxPayers' Alliance
[email protected]
24-hour media hotline: 07795 084 113 (no texts)
Notes to editors:
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Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.
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TaxPayers' Alliance's research council.
- The TPA is running a campaign calling for cuts to council tax.