Barnet council is in talks with the Government over permission to exceed the 5% limit on annual council tax rises, becoming the eighth London borough expected to hike bills well above the national cap. The Labour-run local authority faces a £200 million blackhole in its budget, the largest of any London council.
To balance the books, Barnet would need to increase bills by 32%, or around £500 for the average Band D property, over one or several years. The council has the capital’s oldest population, with one in seven residents over the age of 65, and provision for the elderly takes up a third of the town hall’s annual £544 million budget.
Budget pressures and emergency loans
Councillors say the budget gap is being driven by the surge for costly adults’ and children’s social care and providing temporary accommodation for homeless families. For the last two years, Barnet has relied on £135 million of emergency loans from the Government to avoid effective bankruptcy.
Simon Radford, Barnet’s cabinet member for financial sustainability, said the council had to “make some very painful decisions in the coming months and years and have a brutally honest conversation with residents”. “The task is mammoth – we need to find £200 million of savings or cost avoidance within three years,” he added.
Other boroughs in similar talks
Lambeth and Bromley town halls are understood to be in similar discussions with ministers. Lambeth is predicting an almost £130 million blackhole in its budget by 2029/30 due to rising service costs, driven predominantly by increasing demand for temporary accommodation and social care. Bromley said it will see £30.5 million stripped from its funding in real terms by 2028/29 and is facing by “far the biggest financial challenge” it has ever seen.
Hammersmith and Fulham, Kensington and Chelsea, Westminster, Wandsworth and the City of London face having to at least double the levy from April after their funding was slashed. Five London boroughs – Wandsworth, Kensington and Chelsea, Hammersmith and Fulham, Westminster and the City of London – already face having to impose the largest council tax hikes ever seen next year.
Government response
The hikes come after Labour’s Fair Funding Review, which will slash the Central Government grants for the councils with “historically very low” council tax levels in a bid to get the town halls to bring bills more in line with national averages. Wandsworth has admitted it will enforce a 94% rise in bills – £958 for an average Band D property – from next April, taking the Tory minority-run borough from having the lowest council tax in the country to around average levels.
The Government said it has “consulted extensively on reforming the outdated council funding system to ensure money goes where it is most needed, following on from a long-standing consensus”. It added: “We're also protecting councils through transitional arrangements so no area faces a cliff edge.”
