This article originally appeared in The Standard on 23 February. You can read in full here.
Hundreds of thousands of Londoners are facing a “stealth” council tax rise of £150 a year under Government funding plans.
Shadow local government minister David Simmonds accused ministers of “burying” the proposed hike, for at least two years after the London local elections in May, in the “small print” of its reforms to council funding.
The £150 flat number rise would be on top of a five per cent increase in council tax in both 2027/28 and 2028/29 under the Government assumptions. Ministers are basing their town hall funding allocations on such a rise in council tax in Westminster, Wandsworth, and Kensington and Chelsea.
It would also apply to Hammersmith and Fulham, and the City of London, according to Whitehall sources.
Some of the London councils have already rejected the Government’s blueprint for council tax rises in the capital but this could force them to make cutbacks in their spending plans.
Mr Simmonds, MP for Ruislip, Northwood and Pinner, discovered the ‘stealth tax’ figure by grilling the Government in Parliament on the assumptions that the Ministry of Housing, Communities and Local Government (MHCLG) was making for rises in council tax in Westminster and Wandsworth.
Local government minister Alison McGovern said: “As has been standard practice with previous governments, the Government’s estimate of core spending power, for these councils, assumes that they will increase by 5% in 2026-27 and by 5% plus an additional £150 in both 2027/28 and 2028/29.
“Removing referendum principles (for rises of more than 5%) in these areas will enable the Government to allocate over £250 million more funding for public services in places with higher need instead of subsidising very low bills for 500,000 households in these councils.”
She stressed it would be up to town halls themselves to decide their level of council tax.
But Mr Simmonds slammed the funding plan.
“Buried in the small print of their so-called ‘fair funding’ review is an extraordinary stealth tax grab that would see families in Westminster and Wandsworth hit with 5 per cent rises plus an extra £150 on their council tax bills in 2027/28 and 2028/29,” he told the London Standard.
“Residents face the worst of both worlds: less funding for local services and sharply higher council tax as a direct result of this Government’s decisions, with Hammersmith & Fulham, Kensington & Chelsea and the City of London facing similar increases.”
The Conservatives said that if Westminster and Wandsworth, which were both won by Labour at the 2022 local elections, did opt for the 5% and £150 rise, it would increase a Band D council tax bill by 2028/29 to £919 and £895 respectively.
But Cllr Adam Hug, Labour leader of Westminster City Council which is increasing its council tax this year by two per cent to fund adult social services, said: “We are committed to keeping council tax low and ensuring Westminster retains one of the two lowest council tax rates in the country.”
Westminster had no plans to use the “flexibility” in council tax setting beyond the 5% limit, he added, given its “strong track record” of financial management, transformation and efficiency work, and the upcoming “tourist tax” on overnight stays in London.
Kensington and Chelsea is raising council tax by 5% this year and has not factored in a flat rate increase of £150 for the following two years, with decisions on this to be made later.
Its Conservative leader Cllr Elizabeth Campbell said: “We don’t want to burden people with additional tax rises.”
But she added: “Despite finding £21 million in savings for next year, some increases are now inevitable as a direct result of this Government’s funding decisions.”
Cllr Simon Hogg, Labour leader of Wandsworth Council which is increasing council tax by 2% to pay for social care, said: “Wandsworth Council sets the lowest council tax in the country.
“We don’t want the freedom to increase council tax beyond the 5% referendum limit and my administration won’t be using it.”
The City of London Corporation is considering a “range of options” on council tax with the aim to provide “high-quality, efficient services for workers, residents and visitors”.
An MHCLG spokesperson said: “Council tax choices won’t change a council’s Fair Funding Allocation set by government, based on assessed need and tax base.”
This article originally appeared in The Standard on 23 February. You can read in full here.
