The council has announced it will consult residents this summer on what services they value most and their willingness to pay higher bills
Council tax could be doubled in a central London borough in order to ‘prevent cuts to services’ after the Government redirected funding to deprived areas, it has been suggested. Westminster City Council said it faces “stark and very tough choices” as changes made following the “fair funding” review of council allocations will halve its annual central grant from £219 million to £119 million by 2029-30.
The then Labour-led council voted earlier this year to freeze its share of council tax for 2026/27. This meant while there was not a hike to the core part of this year’s council tax, a 2 per cent rise in the social care precept – a ring-fenced budget for adult social care – was imposed.
The council, which collects more than £2.5 billion in business rates, has one of the lowest average council tax rates in the country with Band D properties in Westminster currently charged £1,047 a year in council tax.
The Conservatives won back control of the council in the May local elections, winning 32 of the 54 seats, and this Tory administraton has argued the Government’s fair funding calculations overlooked high rates of poverty and social challenges in the borough, and failed to account for the pressures placed on services by one million daily visitors.
Westminster, along with five other councils, has been granted two-year “funding realignment powers”, which enables it to increase council tax beyond the 5 per cent threshold. This effectively signals that the Government expects the authority to hike council tax significantly to make up for lost funding, Westminster said.
The council has announced it will consult residents this summer on what services they value most and their willingness to pay higher bills.
Cabinet member Paul Fisher said: “The Government assumes we are now going to put up council tax by 75–100 per cent to make up our immediate budget shortfall. Whilst we have not yet settled on council tax levels for next year, this new financial climate is unprecedented and presents us with stark and very tough choices ahead where there are no easy options.”
He added that “extensive efficiencies and transformation plans” would not cover the budget shortfall in the coming years, so residents will be asked if they are prepared to pay more council tax.
Mr Fisher added: “Whilst we will continue to fight for Westminster residents and take our case to the Government, we need to be honest that there is no easy option here and no horizon in which we do not have to make savings.
“We charge the second lowest council tax in the country, provide cost efficient services and collect more than £2.5 billion in business rates – yet we are effectively being forced into making huge savings, with likely cuts and expected council tax increases. Even if we doubled our council tax, we would still be one of the lowest in London and the country.”
A Labour source said: “The fair funding formula is about directing money to the areas in Britain’s most deprived communities around the entire country. I don’t think even Westminster council would think that they are top of that particular list.”
The Local Government Association said that despite the funding reforms, councils in England are facing a £7 billion funding black hole within three years, a gap which is more than the current council spend on roads, transport, homelessness and housing services combined.
The four other councils granted funding realignment powers are City of London, Hammersmith and Fulham, Kensington and Chelsea, Wandsworth and Windsor & Maidenhead. A total of seven other councils have been permitted to increase council tax to a specific level.
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