Residents in six English boroughs could face the highest council tax increases on record, with £800 surges on the cards. Six English councils are said to be considering increases due to budget constraints, following Labour's changes to local authority funding.
While the annual increase is usually capped at 5%, the Government has granted six councils an exemption so they can raise rates beyond this for the next two years, after changes to central Government funding have caused serious budget shortfalls.
Wandsworth faces potential 160% increase
Wandsworth Council is reportedly considering the highest increase of up to 160% in April next year. No firm decision appears to have been made yet.
This means the owner of a Band D property could see their council tax bill rise by around £800 a year, up from around £1,020. Half of this goes to the council, so increasing this portion by 160% would see their bill rise to £1,834 a year.
For context, this borough currently pays the lowest rate in England for a Band D property. Dorset residents in the same band are charged around £2,765. However, the unexpected increase could put huge pressure on families during the longstanding cost of living crisis.
Other councils granted special permissions
The other councils granted special permissions were Westminster, Kensington and Chelsea, Hammersmith and Fulham, City of London, and Windsor and Maidenhead.
In Westminster, the council is reportedly considering an 100% increase, reports The Sun, which could see residents forking out £500 more per year. Currently, Band D residents pay £1,047. The council has sent letters to 200,000 residents asking what services it should cut.
It’s not yet known whether the other four councils are considering raising the tax.
Budget shortfalls and funding changes
The budget shortfalls reportedly arose after Housing Secretary Angela Rayner changed how funding is allocated to local authorities. She introduced Labour’s Fairer Funding Review to redistribute cashflow toward more deprived regions.
This means wealthier areas such as Kensington and Chelsea will see larger cuts, with the understanding that lifting the 5% cap will help fund the councils.
Wandsworth, which is run by a minority Conservative administration after Labour lost control in May, is projected to receive £84million less a year from Whitehall by the end of the decade, which represents a 40% reduction in funding.
A spokesperson from the Ministry of Housing, Communities and Local Government said: “Decisions on whether to increase council tax are ultimately for local authorities to make and justify but we continue to expect any decisions to put taxpayers first. “The flexibility given to Wandsworth Council is time limited and we’re making £278million available for them by 2028-29.”
Areas where council tax could rise more than 5%
- Windsor and Maidenhead
- Hammersmith and Fulham
- Kensington and Chelsea
- Westminster
- City of London
- Wandsworth
