London boroughs face council tax hike
Some London boroughs are facing a potential council tax increase of up to £150 in what has been described as a "stealth" rise. Ministers are reportedly considering the move to alleviate budget pressures on local services in areas including Westminster, Wandsworth, and Kensington and Chelsea.
- The proposed £150 flat-rate increase would be in addition to a potential 5% rise in both the 2027/28 and 2028/29 financial years for boroughs like Westminster, Wandsworth, and Kensington and Chelsea. This is part of a broader government reform of local government funding. - This "stealth tax" was revealed through parliamentary questioning by Shadow Local Government Minister David Simmonds, who accused the government of hiding the planned hike in the fine print of its funding reforms. - Historically, boroughs like Wandsworth and Westminster have maintained some of the lowest council tax rates in the country, partly by deriving significant income from other sources like business rates and parking charges. For the 2026-27 period, Wandsworth and Westminster are only increasing the social care portion of the tax, resulting in a smaller 2% rise. - The government's "Fair Funding Review" aims to redistribute funds to more deprived areas, which could reduce central government support for some inner London boroughs and increase their reliance on locally raised revenue. - Six councils—Kensington and Chelsea, Westminster, Wandsworth, Hammersmith and Fulham, the City of London, and Windsor and Maidenhead—have been granted the authority to increase council tax by more than the usual 5% cap without a local referendum. - London councils are facing significant financial pressure, with a collective funding shortfall estimated at £1 billion in 2025/26, potentially rising to £4.7 billion by 2029. This is driven by increasing demand for services like homeless support and social care. - For the 2026-27 financial year, 35 councils in England are set to receive approximately £1.5 billion in "exceptional financial support" from the government to help them set balanced budgets. - Council tax in England is based on property valuations from April 1991, which has led to a regressive system where those in lower-value homes often pay a proportionally higher rate of tax compared to those in the most expensive properties.
