How is it possible for a borough to raise council tax by 94% and could more councils follow?

It used to have one of the lowest council tax rates

While a final decision won't be made until early 2027, the plans by Wandsworth Council were announced the plans at a meeting on Tuesday.

As per The Times, AUK borough's council has confirmed that it is has plans to increase council tax by 94%.

Council tax for a Band D property is set to increase by £958, in response to what Wandsworth Council describes as the “financial pressure” of reforms by the government.

The highest council tax hike in English history

Around 327,500 people live in the London borough, as per the 2021 census.

Previously, the south London borough had one of the lowest council tax rates in the UK.

A riverside commercial development, between Battersea and Wandsworth bridges in London. Image: Adobe Stock.

The Conservative administration says following the publication of what it calls a “comprehensive” spending review that the government's Fair Funding reforms will reduce Wandsworth's funding by £84m a year.

According to the authority, the reduction is equivalent to its combined total annual spend.

This includes spending on bin collection and street cleaning, parks, libraries and leisure centres.

The new spending reforms will place “significant additional pressure on essential local services and means the council must make tough choices”, it further adds.

According to newly appointed council leader Robert Morritt, increasing council tax was not a decision he “ever wanted us to have to make”.

However, he added that the announcement was being made now to ensure “local people have the maximum amount of time to adjust”.

Aerial view of Wandsworth in southwest London UK Drone. Image: Adobe Stock.

Why the government is blamed for the raise

The increase on “savage cuts from central government” and “a dramatic reduction” in the council’s level of reserve was to blame, Morritt added.

“Setting out a clear plan to protect the services residents rely on while tackling the financial challenges facing the council”, he added, commenting on the outcomes of the spending review.

“There are difficult choices in this report, but there are also clear priorities: cleaner streets, safer communities, stronger housing services, support for vulnerable residents and action to put the council back on a sustainable financial footing”, he said.

Meanwhile, Peter Graham, deputy leader of Wandsworth Council and cabinet member for finance, said: “We promised that we'd be honest with residents.”

“Council tax will need to rise unless government thinks again. And it must think again”, he added.

On the other hand, Simon Hogg, the Wandsworth Labour leader said: “When Labour ran Wandsworth Council we had the lowest council tax in the country.”

Whereas previously, a spokesperson for the Ministry of Housing said in a statement: “The flexibility given to Wandsworth Council is time limited and we’re making £278million available for them by 2028-29.”

The increase that councils are bound to per year

Councils are usually bound to a 5% increase per year, however, in exceptional circumstances, this number can be increased substantially.

Whether the amount of council tax they plan to raise is “excessive” is something that is required to be determined by local authorities, fire authorities, and Police and Crime Commissioners.

It is the Secretary of State that sets thresholds of excessiveness, known as “referendum principles”, for different classes of authority.

These thresholds have, since 2016-17, also included a “social care precept”, providing higher thresholds for authorities with social care responsibilities.

And each February, the thresholds are finalised alongside the annual Local Government Finance Settlement.

Prior to implementing the increase, any authority proposing an excessive increase in council tax must hold a local referendum and obtain a “yes” vote.

However, councils can raise council tax beyond 5% without holding a referendum if they get special government permission.

Meanwhile, an authority proposing an excessive increase must also make substitute calculations, based on a non-excessive council tax level.

If the excessive increase is rejected in the referendum, this is then implemented.

You can read here for more on the council tax levels set by local authorities in England and on referendum principles.

The councils which could follow Wandsworth revealed

Bournemouth, Christchurch and Poole Council could be next to follow suit, as according to Bournemouth Echo, the council is not ruling out a council tax rise above five per cent or higher charges for services to plug a £27 million budget gap.

It was announced in August this year that BCP Council is forecasting a £27 million overspend in this year’s budget.

This reportedly comes as a result of a rising cost and demand for care services for children and adults, and a reduction in government funding.

According to Councillor Mike Cox, BCP Council cabinet member for finance, the council realised during the first quarter of the financial year that they were heading towards an overspend.

“Departments were reminded to control spending and remain within their budgets”, he said.

“However, it wasn’t until after quarter one that we understood the full extent of the overspending, particularly in children’s services and adult social care.”

“In response, we introduced red spending controls, including a vacancy freeze, additional approval requirements for purchase orders, and financial recovery measures across services”, he added.

The BCP Council is limited in its options for raising additional funds as it relies mainly on council tax, service charges, and central government funding.

The council committed to delivering £14 million in savings when setting its 2026/27 budget, but it currently projects a shortfall.