Three London boroughs—Barnet, Bromley and Lambeth—have asked the Government for permission to increase council tax above the 5% national cap to address shortfalls in central government funding.
The requests follow the introduction of the Fair Funding Formula, launched by Angela Rayner in June last year. The framework has been criticised for reducing funding for areas deemed to have higher revenue-raising potential. Councils argue it does not account for factors such as homelessness or the cost of living, which has forced several London councils to raise council tax to cover the drop in central government spending.
Councils seeking above-cap increases
Wandsworth and Hammersmith & Fulham councils have already been given approval for large increases earlier this month—by 94% and 150% respectively. Barnet Council is now proposing a 32% increase, which would make its average band D bill £2,060, up from £1,622. The north London council faces a £200 million shortfall by 2030, driven by cuts in government funding and rising social care costs. In a social media video, the borough said it spends 18 times as much on children’s services than on libraries.
Bromley Council is also proposing an unspecified increase to offset a funding cut projected to reach £30 million per year. Green-led Lambeth is projected to face a £130 million deficit by 2029-30, making it the third council to seek an unspecified tax increase.
Council leaders on the funding gap
Simon Radford, Barnet Council’s cabinet member for financial sustainability, told The Times: “The task is mammoth. We need to find £200m of savings or cost avoidance within three years. We need to make some very painful decisions in the coming months and years, and to have a brutally honest conversation with residents.”
Colin Smith, leader of Bromley Council, told the same publication: “The government’s decision to reduce Bromley’s funding by more than £30m by 2028 leaves us with no other viable option than to consider a higher-than-desirable council tax increase. That is the painful exercise we have had to embark on.”
Wider impact on the capital
Hammersmith and Fulham have already considered adding £29 a week to council tax in a report announced earlier this month. The Labour council concluded it is losing more than half of its Government grant under the Fair Funding framework. It is one of five councils given the green-light to raise bills above the 5% cap; the others are Wandsworth, City of London, Westminster, and Kensington & Chelsea councils.
Barnet has been dependent on £135 million of emergency loans from the government to avoid bankruptcy. The Ministry of Housing, Communities and Local Government said: “We’re fixing an outdated system so that funding goes where need is greatest, while protecting councils through the transition and ensuring no area faces a cliff edge. For London councils, we’re making £11.5 billion available — that’s more than a 38 per cent increase since 2024-25 — in recognition of the particular pressures facing the capital, such as the high costs of temporary accommodation.”
Prime Minister Andy Burnham’s Government faces pressure over how policies could disproportionately impact the capital. Policies set to come into play, like the “mansion tax” in 2028, will mean properties valued above £2 million will be charged an additional levy. London already accounts for a significant proportion of the homes set to be hit by the tax.
