Westminster City Council has proposed reducing council tax support for working-age residents by up to 30%, a move that could affect more than 15,000 people, as it seeks to address an expected £100 million drop in government funding.
The Labour government is set to reduce Westminster’s grant by £100 million under its Fairer Funding Review, a major shake-up to central government funding levels. The Conservative-controlled council said the reduction in council tax support could generate between £147,000 and £817,000 per year in additional revenue, depending on the exact level of cut chosen.
Consultation on support reduction
Council tax support is offered to those on certain benefits or who have a low income. Westminster is one of seven London local authorities that offers qualifying residents 100% council tax relief. A consultation currently underway could see assistance reduced by between 10% and 30% for working-age applicants.
Councillor Paul Fisher, Westminster’s cabinet member for finance, approved the decision to proceed with the consultation earlier this month. The council has been upfront with bill payers that a council tax rise is looming.
Impact on residents
Westminster’s council tax support scheme costs the council £13.6 million per year in lost revenue, with more than 15,600 claimants. Most of the claims are by people of working age (9,437), made up of those with limited capacity to work (6,580), households with children (3,935) and single parents (1,985).
If a reduction in support is approved, someone in receipt of council tax support and living in a Westminster Band D property would need to contribute between £2.01 and £6.03 per week towards council tax. Previously they may have paid nothing.
Funding crisis across London
Westminster is one of a host of London boroughs looking at how to deal with black holes in its upcoming budgets following Labour ministers’ reforms to council funding in England. Stephen Cowan, leader of the Labour-run Hammersmith and Fulham Borough Council, said his administration was being forced to embark on the “biggest cuts programme we’ve ever introduced” as it prepares for its spending power to be cut by more than half over the next four years.
The west London local authority has warned it could have to hike bills by an unprecedented 150% – Britain's biggest-ever percentage council tax rise – after being given special dispensation by ministers to go beyond the current 4.99% limit on increases without requiring a local referendum. Southwark Council, run by a coalition between the Green Party and the Liberal Democrats, has started what Green leader James McCash called an “honest conversation” with residents about the “difficult choices” it faces when it comes to balancing the books.
Gerald Almeroth, the council’s executive director of finance and resource, said that the council’s current scheme of 100% council tax support made Westminster an “outlier”. In a report, Mr Almeroth said: “Given the significant reduction in central government funding and continuing pressures on its finances, the council must consider all available options to ensure its long-term financial sustainability and protect the delivery of essential services.”
Ministers have argued that local authorities with “historically low” council tax levels will have the cash they receive from Whitehall reduced following the Fair Funding review, forcing them to bring bills into line with national averages to make up shortfalls. Hammersmith and Fulham, Westminster, Kensington and Chelsea, Wandsworth, City of London and Windsor and Maidenhead have been given the power to raise bills above the 5% cap next year to balance their budgets in the wake of the cuts.
