Redcar & Cleveland Council Plans 4.99% Council Tax Hike as Financial Crisis Deepens

Redcar & Cleveland Council

Plans, which are to be put out to consultation will still need final approval from a full council meeting in the New Year.

9th December 2025

Redcar & Cleveland Borough Council has revealed plans to raise council tax by almost the maximum permitted 5% for the 2026/27 financial year as it battles one of the most severe financial deficits in its history.

According to Cabinet papers published ahead of a meeting being held today, the authority intends to consult locals on a 2.99% general council tax rise and an additional 2% Adult Social Care precept, bringing the total increase to 4.99%..

Council Facing Critical Budget Gap & “Critically Low” Reserves

The financial report put to councillors today & seen by the Teesside & Durham Post paint a stark picture of a local council which has been running significant annual budget deficits, with officials claiming those deficits have been driven by soaring demand in Children’s and Adult Social Care and years of government underfunding.

Its claimed reserves have fallen to “critically low levels”, leaving Redcar & Cleveland Council exposed to financial risk. To plug the gap, its sais that finance officials are preparing to rely on the Government’s “Additional Financial Flexibilities Scheme”, which would allow the council to borrow an additional £15 million pounds to meet day-to-day spending for next year, with the Council stating the borrowing is essential to avoid devastating service cuts while it awaits expected increases in income from business rates and fair funding reforms.

Costs for children in care have reportedly skyrocketed, with more children requiring expensive placements due to increased complexity and market shortages. The Council claims it now needs £4 million pounds extra every year just to stabilise this service.

In addition to childrens services costs, A planned 3% staff pay award, as well as rising waste disposal and highways costs have added millions more to the annual budget.

Finance Chiefs have also outlined that because the councils reserves are now dangerously depleted, plans have been put in to divert £6 million pounds worth of new business rates income to replenish them..

While exact figures vary by property band, a 4.99% increase would mean:

• Band A (most common locally): approx. £75–£80 more per year

• Band D: approx. £120–£130 more per year

  
  

Exact bill increases will be published once the Council finalises its calculations sometime in Feburary 2026, but the rise represents the largest permitted annual increase without triggering a referendum.

Council Tax Base Deficit Makes the Situation Worse

The Cabinet papers also confirm that a £278,000 deficit in the Council Tax Collection Fund has occurred, with the Council left with no alternative but to absorb £231,000 of that loss in the 2026/27 budget

The consultation period for the poised increase runs from 10 December 2025 to 2 January 2026, after which Cabinet will submit its final budget to full Council for approval on 26 February 2026.

Stockton & Middlesbrough Council are also expected to announce similar increases, with the exception of Hartlepool Borough Council, where the Labour administration has controversially announced plans to freeze Council Tax Bills despite warnings from the councils finance officials that they may not be able to sign off a balanced budget, potentially triggering a catastrophic financial collapse in mid to late 2026 according to sources working for the local council.