A prominent Labour council plans to set the second lowest council tax in the country while warning that it faces a financial crisis due to Government funding cuts in London.
Westminster council says it will only increase the amount of council tax used to fund adult social care – adding just over £10 on average - while freezing the rest of its share of the bill, in recognition of the cost of living pressures faced by many Londoners.
When the council’s demand is added to the increased amount being charged by London mayor Sir Sadiq Khan, it means that benchmark Band D bills in Westminster will increase from £1,017 to £1,048 from April.
This is expected to be the second lowest demand in the UK, with only Wandsworth cheaper. Last week it announced plans for a total bill of £1,020 after also deciding to only increase the part of the bill that funds adult social care.
In Westminster, households will pay £510.51 to the mayor – primarily to help fund the Metropolitan police and the London fire brigade – and £537.34 to the council.
Westminster plans to balance its 2026/27 budget by making £32m of new savings and using almost £20m from reserves.
There are London borough elections in May and Westminster’s Labour leadership, as in Wandsworth, is desperately trying to avoid having the council return to Conservative control.
Westminster says that nationwide changes to the way the Government funds local authorities will have a “significant adverse impact” for a number of reasons, including less recognition of how many people work or visit the West End, putting “substantial financial pressure” on the council.
A report on the council’s finances stated: “The council’s funding allocation under the new system does not adequately reflect the level of need.”
It faces a £88m hole in its annual budget in three years.
The Government has given Westminster permission to increase council tax bills by more than five per cent in 2027/28 and 2028/29 but the council says it does not want to do so – a similar position to Wandsworth.
Westminster hopes that the proposed introduction of a “tourist tax” will generate between £20m and £80m a year to boost its spending power.
Many London councils face a reduction in Government funding as a consequence of changes made in the “fair funding review”.
Westminster says its spending plans for the coming financial year include £34m for Regent Street to make its lower section more attractive for pedestrians.
Adam Hug, Labour leader of Westminster council, said: “Like other local authorities, Westminster City Council is facing unprecedented financial pressures.
“Keeping council tax low is just one way we are helping local people with rising bills and the cost-of-living crisis.
"We are lobbying hard to ensure Westminster gets its fair share of the revenue from the Government's proposed overnight levy.
“Millions of visitors come to our City every year, and it is right that - like other world capitals - we ask a modest nightly fee to pay for the services they use while here. That money can then be spent locally to benefit local people and businesses."
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