Plymouth City Council looks to raise tax by 4.99%

Plymouth City Council is looking to increase council tax by 4.99% when it meets to decide its annual budget later.

The council said it was facing rising costs and demand in areas such as children's social care placements, homelessness and special educational needs.

According to the council's budget report there is still an outstanding risk to council finances from a £72m pension transaction in 2019 which has not been signed off by the government.

The council says a letter from the previous government in February 2024 "provided assurance" the budget could go ahead but the report notes a risk of the council having to issue a S114 report - effectively declaring itself bankrupt.

Plymouth City Council borrowed £72m from the government in 2019 to invest in a company with the aim of reducing the council's pension fund deficit.

The previous government said in March 2024 the transaction was "not in line with normal accounting practice" and ordered an investigation.

It is not clear what has happened to that investigation and the BBC has asked the Ministry of Housing, Communities and Local Government for an update.

Plymouth City Council's budget report notes that if the pension transaction is not signed off the council's finance officer "would be required to consider issuing a S114 report".

Councils technically cannot go bankrupt - but they can issue what's called a section 114 notice, where they cannot commit to any new spending.

Plymouth City Council said it would not add to the information contained in the budget report ahead of it being discussed on Monday.

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