Cash-strapped London councils are considering the largest council tax increases ever seen, potentially forcing residents to pay several hundred pounds more a year in order to balance budgets.
Conservative-held Wandsworth Council is thought to be discussing whether to raise charges by up to 160 per cent in April next year.
It would mean an extra £800 a year for residents in average, Band D properties in the south London borough.
The potential hike “beggars belief”, said Labour councillors in Wandsworth. But the Tories blamed the Labour Government – arguing that unfair changes had slashed Whitehall funding in areas which have kept their council tax low.
Westminster Council chiefs, with also some of the lowest rates in the country, have raised the prospect of a mammoth council tax rise of up to 100 per cent, which would hike average bills by more than £500 a year.
Residents in several other parts of London and the south east are also facing significant council tax rises as local authorities struggle with financial black holes and face up to a £7bn gap in funding over the next three years.
Wandsworth Council planning huge hike
Wandsworth Council is discussing whether to raise council tax by as much as 160 per cent in April, Politics Home first reported.
The flagship Tory local authority – once described by Margaret Thatcher as her favourite council – has traditionally kept its council tax rates extremely low.
The average Band D resident in Wandsworth currently pays only £1,020 a year, the lowest in England, in contrast, residents in Pendle, Lancashire, pay approximately £2,500.
Roughly half of that is the council element, while the other half is the charge set by Greater London Authority (GLA).
A rise of 160 per cent in the council element would add an extra £814 to a typical Band D bill – pushing it up to £1,834 a year.
Although nothing has been agreed by Wandsworth councillors, The i Paper understands the council is discussing a potential three-figure percentage increase of 100 per cent or more.
If the council element of the annual council tax bill was increased by 100 per cent, it would increase bills by just over £500 a year for Band D properties.
Housing Secretary Angela Rayner changed councils’ funding formula (Photo by James McCauley/Getty Images)Wandsworth is one of six councils – along with Westminster, Kensington and Chelsea, Hammersmith and Fulham, City of London and Windsor and Maidenhead – given special permission to hike council tax beyond the usual 5 per cent limit.
These local authorities are facing significant budget shortfalls after Housing Secretary Angela Rayner changed the formula that divided up how much Whitehall funding goes to each council.
The fair funding review has aimed to get more cash to areas with higher needs. It gives more weight to deprivation levels as well as councils’ ability to raise money themselves.
Tory councillor Peter Graham, deputy leader of Wandsworth, said the council was facing a budget shortfall of £137m.
Graham blamed the Government’s funding cuts, and the “budget hole” left by the local Labour administration that ran the council for four years up until May’s local elections. “We are striving to keep any tax increase as low as we can feasibly make it,” added Graham.
Wandsworth’s Labour leader Simon Hogg said the new Tory administration “don’t have a plan for how to run the council”. He added: “It beggars belief that Wandsworth Conservatives are planning Britain’s biggest ever council tax increase.”
Westminster Council also facing mammoth rise
The Conservative-run Westminster Council has said it faces losing £100m over four years because of the Labour Government’s fair funding changes.
Tory councillor Paul Fisher, cabinet member for finance, has said that the Labour Government’s own figures assume Westminster would have to put up council tax “by 75 to 100 per cent”.
Westminster residents currently pay the second-lowest rates in the country, with Band D properties paying £1,047 a year.
If the council element of the annual bill was raised by 100 per cent, it would add an extra £537 a year – taking Band D bills to £1,584.
The local authority faces “stark and very tough choices ahead,” said Cllr Fisher.
Shadow Housing Secretary James Cleverly has attacked Labour’s funding formula (Photo: Ian Forsyth/Getty Images)The Tories claim that fair funding changes mean “well-run” councils with low council tax rates are being penalised. Money is being moved to poorly-run Labour councils with higher charges, they argue.
“Conservatives will fight this blatant attempt to prop up inefficient Labour-run councils by taking money from well-run Conservative councils,” said Shadow Housing Secretary James Cleverly.
But Labour councillor Ellie Ormsby, leader of the party’s Westminster Council group, rejected the criticism. She said successive Conservative Governments “delayed” the necessary fairer funding review “meaning we now face a cliff edge”.
Four other councils facing cap-busting hikes
Hammersmith and Fulham, City of London, Kensington and Chelsea, and Windsor and Maidenhead are also facing major funding cuts.
“I expect they are all looking at increases over 70 per cent, and perhaps more,” one local government source told The i Paper.
All these councils’ rates are currently well below England’s national average of £2,392 a year for a Band D property.
City of London raised its council tax by 5 per cent earlier this year, which means current Band D properties pay £1,329 annually.
Hammersmith and Fulham and Kensington and Chelsea both raised council tax by 5 per cent in April – pushing Band D properties to £1,519 and £1,569 a year respectively.
Windsor and Maidenhead rose council tax by 7.5 per cent in April, taking average non-parish areas to £1,936 a year.
Kensington and Chelsea has traditionally had low council tax (Photo: Jason Alden / Bloomberg via Getty Images)Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council, urged ministers to “rethink” cuts of more than £100m to its funding. She said “significant savings” would have to be made, but no decision have been made yet on council tax.
Kate Ogden, senior research economist at IFS, said no new limit that has been set out by the Government that would limit the possible bill increases in these areas.
“Some of these areas – particularly Wandsworth and Westminster – currently set very low council tax bills,” said the IFS expert.
“Funding figures published by the Government assume that these councils might significantly increase their council tax bills, moving them closer to the national average,” said Ogden.
Andy Pike, professor of regional development studies at Newcastle University, is sceptical about council tax bill rises of anything like 70 to 100 per cent.
Such mammoth increases may prove “politically unfeasible,” he said. “I can’t see how Government would allow it, or councillors would vote for those sorts of huge increases.”
More councils across England could still ask for special permission to go over the 5 per cent cap in April next year.
Seven councils were granted special dispensation to go above that limit before the council tax rises for 2026-27. But all those increases came in under 10 per cent.
Reform-run Worcestershire County Council raised council tax 9 per cent in April. Liberal Democrat-controlled Shropshire and North Somerset also hiked bills by 9 per cent.
A Government spokesperson said fair funding reforms aim to provide money “where it is needed most”.
They said they had provided a “time-limited council tax flexibility” to six local authorities. “While decisions on whether to increase council tax are ultimately for local authorities to make, we expect them to put taxpayers first.”
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