Wandsworth Council increases tax by 94% and faces bankruptcy

Local government finance across the United Kingdom faces unprecedented turmoil as Wandsworth Council has declared a dramatic 94% tax increase for Band D residents. The Conservative-led local authority, historically celebrated as Margaret Thatcher's favourite due to its historically low council tax rates, has warned that it was pushed to the brink of insolvency, with leaders admitting the stark choice facing the authority was balancing the books or sliding into bankruptcy.

The decision by Wandsworth Council means Band D taxpayers will face an extra £958 on their bills from next year. Local leaders blamed central government for slashing funding by £84m annually, alongside pressures from inflation and historical administration plans. Local leaders have stated that they've already made savings of £529 per Band D taxpayer in an attempt to bridge a funding gap. The Conservative-led council claims it had to address a spending shortfall of approximately £1,434 for average households in the area, with over a third of this total attributed to government funding cuts and the remainder stemming from inflation and legacy plans from the previous Labour administration. A Tory insider stated that authorities were left with no alternative to avert financial collapse, according to City AM, reporting that the authority was faced with a stark choice:

Media additions

"either balance the books through tax rises or face bankruptcy"

Tory insider, Wandsworth Council, via City AM

Deputy leader of Wandsworth Peter Graham insisted that council members did not take the decision lightly, stating that residents should not carry the cost of an unfair funding system. Graham asserted:

"Residents should not be left to carry the cost of an unfair funding system. That is why we are fighting hard at the heart of Government for a fairer deal for Wandsworth, and why we have made a clear case ahead of the Autumn Budget that our borough should not be punished for running efficient services and keeping council tax low."

Peter Graham, Deputy Leader, Wandsworth Council

Local Labour MPs Marsha De Cordova, Rosena Allin-Khan, and Fleur Anderson fired back at the council leadership. In a joint letter reported by Politicshome, the MPs refused to back Wandsworth's plea for supplementary funding. They accused the current administration of attempting to rewrite financial history and shifting responsibility for damaging local choices away from the Conservative leadership, contending that the borough had previously been carefully managed under the previous Labour administration.

Up in the West Midlands, Worcestershire County Council has been given permission for a 9% tax rise, highlighting a parallel local government emergency. The Reform-led Worcestershire authority received special ministerial clearance to raise council tax by 9% if local politicians decide to go ahead with it, which would represent the largest rise in its history and add roughly £145 to annual Band D bills. Current regulations normally prevent any authority from increasing council tax above 5% without explicit government sign-off.

Worcestershire's Reform leadership had initially applied for permission to go up to 10%, but ministers refused and instead settled on the lower figure to protect households from spikes above the national average. A spokesperson for the Ministry of Housing, Communities and Local Government noted that no household in Worcestershire would see their bills pushed above the national average. The authority is also waiting for an answer over £71m it requested in Exceptional Financial Support from the government, with Reform saying that would be a factor in deciding the final council tax rate. Reform council leader Jo Monk stated that the administration wants to keep council tax as low as possible and would not want to overcharge residents, as reported by the BBC, noting:

"We want to keep council tax as low as possible. We all pay council tax—we wouldn't want to overcharge anybody on that."

Jo Monk, Leader, Worcestershire County Council, via BBC

Political friction has erupted in Worcestershire just as it has in London. Opposition Conservative MPs and councillors launched a petition against the proposed rise, which more than 1,000 people have signed so far. Bromsgrove MP Bradley Thomas termed the increase eye-watering, adding that this inflation-busting increase is a far cry from the promises the new administration made to residents when they wanted people's votes last year. West Worcestershire MP Harriett Baldwin criticised the administration for breaking promises made to voters regarding efficiency savings, stating that Reform councillors were elected on a promise of finding efficiency savings to keep council tax down, yet they immediately hatched plans to increase council tax to balance the budget, and local people will want to know how the council can justify this massive increase and what improvements in services will come from this extra demand for cash. Political fallout has already hit the council room, with Reform councillor David Taylor resigning from the party over the weekend to sit as an independent in protest over the proposed tax hikes.

The Ministry of Housing, Communities and Local Government noted that seven local authorities across the country have been granted permission to increase tax above 5% from April, but added that in almost every case, the agreed rises are lower than what the councils have requested to ensure taxpayers are protected. Alongside Worcestershire, Shropshire and North Somerset were the only areas given permission to go to 9%.

What to Watch Next

• Worcestershire County Council's final figure will be revealed later in the month, ahead of its annual budget-setting meeting scheduled for 26 February.
• A council spokesperson stated that the government report and final financial settlement require approval from the House of Commons, and the authority awaits this final confirmation while working through details of the proposed settlement.