London (Parliament Politics Magazine) – Conservative party leader Kemi Badenoch has proposed that council tax increases may be necessary, claiming a £2.4 billion “black hole” facing local authorities next year.
She accused the government of targeting the private sector with its latest budget which she claims is designed to “milking the private sector” by increasing the National Insurance burden on employers.
During her second session at Prime Minister’s Questions, the conversation leader demanded answers on how the government plans to assist local councils in managing the consequence of the National Insurance hike, especially concerning rising social care costs.
In response, Prime Minister Sir Keir claimed Mrs Kim Badenich “wants all the benefits” of the budget but has not outlined how to cover the costs, and later dismissed her argument and said, “Questions based on what we’re actually doing are usually better than fantasy questions made up”. I don’t want to be rude but no thank you, very much”.
Conservative Party leader Kemi Badenoch stated, “I know that he has been away, but did the Deputy Prime Minister who runs that department make him aware of their £2.4 billion black hole?”.
She added, “The Prime Minister probably does not realise that, on Monday, the Ministry for Communities, Local Government and Housing revealed that councils will need to find an additional £2.4 billion in council tax next year. That is a lot more than £600 million”.
Sir Keir replied, “Let me get this straight, she doesn’t want any of the measures in the Budget, but she wants all the benefits. So the magic money tree is back after two weeks in office. They’ve learned absolutely nothing. We put forward a Budget which takes the difficult decisions, fixing the £22 billion black hole that they left, investing in the future of our country”.
He insisted, “They say they want all of that, but they don’t know how they’re going to pay for it – same old Tories”.
Chancellor Rachel Reeves in her budget last month announced a rise in National Insurance for employers, with the tax on employers earnings set to rise from 13.8% to 15%, starting from April 2025.
At the same time, the payment threshold will be reduced from £9,100 to £5,000 per year.
Rachel Reeves proposed changes are expected to raise £25 billion annually, framing the decision as important to securing a firm footing for stabilizing the nation’s public finances.
The Conservatives pointed to responses to written parliamentary questions, which highlighted that estimated core spending power (CSP) for local government will hike from £64.7 billion in 2024/25 to £68.4 billion in 2025/26. Despite this increase, the party insisted that the budget fails to provide enough new funding to meet the gap.
While talking at PMQs, Mrs Badenoch inquired: “Will the Prime Minister confirm that he will keep the cap on council tax?”
In reply, Sir Keir replied, “On the question of councils, she knows what the arrangements are”.
Kemi Badenoch responded: “I think the House would have heard that the Prime Minister could neither confirm nor deny whether the cap on council tax was being raised.”
Mrs Badenoch further questioned how much more money local authorities would need to generate to address the “social care funding gap” caused by the Chancellor’s Budget and the rise in employer’s national insurance.
Sir Keir Starmer in a response to the question asked by Liberal Democrat MP Christine Jardine (Edinburgh West) on healthcare funding, responded, “It’s all very well this knockabout but not actually listening to what I’ve said three minutes ago is a bit of a fundamental failure of the Leader of the Opposition. I just said £600 million. I repeat it: £600 million”.
Conservative leader Badenoch raised concerns about the rising costs for care providers, with an accusation from Keir Starmer, who claimed to charge the Tories with leaving local authorities in an “ absolutely catastrophic state”.
Later on, the opposition leader said, “Their ideological Budget was designed to milk the private sector and hope nobody would notice. Now his Cabinet ministers are all queuing up for public sector bailouts to his tax mess. If he is going to bail out the public sector then can he tell us this: does he think it is appropriate – as the Ministry for Housing has done – to approve a four-day week for councils that is not flexible working, but is actually part-time work for full-time pay?”.
After Prime Minister’s Questions, the Prime Minister’s press secretary regarding the council tax cap, told reporters, “The threshold remains the same”.