Budget challenge

Every pound we spend on services, from bin collections and parks to housing support and leisure centres, comes from a mix of income sources.  

A large proportion of the money to fund the services residents need and rely on used to be provided through a core grant from the government. Councils add to this through Council Tax and other fees and charges. 

However, this has changed over the years. We stopped receiving a core grant from government and limits have been put on the amount of Business Rates we can keep. This means we have had to become much more commercially focused, increase income and make savings to help us pay for core services. 

Colchester City Council’s share of Council Tax 

Around 11% of your overall Council Tax bill comes to Colchester City Council. That contribution helps fund day‑to‑day services like waste and recycling, keeping streets clean, and managing parks.  

Our portion of Council Tax will increase by 2.99% in the coming financial year - just below the current national inflation figure of 3%. The city council’s increase adds around 13 pence a week (£6.71 a year) to the bill of a typical Band D property in 2026/27. 

Although Colchester City Council collects all the Council Tax paid in the city, for a Band D property we only keep approximately 11p in every pound of what residents pay. The lion’s share (around 73p) goes to Essex County Council, with Essex Police receiving 12p, Essex Fire and Rescue 4p and parish-tier councils just over 2p. This will vary depending on the Band of your property. 

Here is how we received our funding in 2026/27: 

The great majority of our funding comes from grants from the government and income we earn. 

• Council Tax: £15.6 million 

• Government Fair Funding Allocation: £14.5 million 

• Housing Benefit subsidy, fees & charges* and other income: £88.8 million 

Fair Funding Allocation 

Included in the Fair Funding Allocation is a share of local business rates and a grant from Government. This grant also includes specifically ring-fenced funding for work to reduce homelessness. 

Income from our own services 

We also generate income, for example, from leisure centres, car parks, and renting out commercial properties. This helps reduce the burden on taxpayers and protects services residents rely on. 

Fees, charges and other income 

Some services are partly funded by fees, such as planning applications or garden waste subscriptions. 

Between April 2025 and March 2026, we will have spent around £120 million delivering these services. Please remember that Council Tax only funds 11% of our costs. 

But the Government funding formula for councils has now changed 

The Government is now providing a three-year settlement for local authorities, helping us to plan better for the future. In 2026/27, the city council will have extra funds specifically ring-fenced for work to reduce homelessness and additional general funding to improve financial resilience as the council prepares for reorganisation. This is good news and gives us more stability and is called the Fair Funding Allocation.