Wandsworth Council is facing an £84 million annual funding cut by 2029, equivalent to a 40 per cent reduction in its budget, forcing the borough to propose a council tax rise of 94 per cent for 2027-28. The increase, totalling £1,171 for one household, stems from the Government's overhaul of how central funding is distributed to councils, based on an assessment of service delivery costs and each local authority's capacity to raise council tax. The changes also affect how business rates revenue is redistributed between councils, benefiting some while cutting funding for others including Wandsworth, Westminster, Hammersmith and Fulham, Kensington and Chelsea, the City of London and Richmond Upon Thames.
Wandsworth Council says it has identified £79 million in savings through detailed spending reviews but this falls short of covering the withdrawn funding. The council argues that the new funding formula penalises local authorities which have historically kept council tax low through prudent financial management. In its legal challenge, alongside three other London councils, Wandsworth points out that residents and businesses pay £5 billion a year in taxes to Government but receive only £217 million in funding. For every £1 Wandsworth residents pay in taxes they receive about 4p back from central Government, compared to the national average of 12p per pound.
Council leader Robert Morritt has called the central government funding formula 'deeply flawed', arguing it unfairly punishes councils that made 'sensible financial choices'. Westminster Council suggested council tax could need to rise by 200 per cent if it attempted to fill its entire funding gap through council tax alone, though this represents a worst-case scenario rather than a confirmed proposal.
The 94 per cent increase remains a proposal rather than a final decision, with the final level to be determined through Wandsworth's budget-setting process. Residents can participate in the council's consultation, with responses potentially informing the council's challenge to the Government over the funding settlement. Paula Higgins, chief executive of HomeOwners Alliance, noted that individual residents have no formal right of appeal based on finding increases excessive, but public consultation offers a mechanism to voice concerns.
On the separate mansion tax issue, Chancellor John Healey has ruled out extending the High Value Council Tax Surcharge threshold to £1.5 million after the proposal sparked concern among Labour MPs. Under current plans, homes worth £2 million or more will face an additional annual tax bill of between £2,500 and £7,500 from 2028. Wandsworth Council strongly opposed the proposed extension, arguing many affected properties are family homes rather than mansions.
For households with large mortgages and rising council tax bills, this represents a significant increase in fixed monthly expenses at a time when borrowing costs remain elevated following recent mortgage rate rises.