Council tax could DOUBLE in central London borough after Labour 'fiddle' diverted cash to traditional heartlands

By JAMES TAPSFIELD, UK POLITICAL EDITOR Published: 16:24, 3 July 2026 | Updated: 16:28, 3 July 2026 Council tax could be doubled in a high-profile central London borough after Labour was accused of 'fiddling' a funding settlement. Westminster City Council has warned of 'stark and very tough choices' due to its central grant being slashed from £219million a year to £119million by 2029-30. The Tory-run council has accused ministers of overlooking high rates of poverty and social challenges in the area, as well as the costs of dealing with tourists. But the Government is adamant that Westminster needs to foot more costs out of its own revenues, which include £2.5billion annually in business rates.  Along with five other authorities, it has been granted 'funding realignment powers' to increase council tax beyond the 5 per cent cap for the next two years. Under a shake-up announced for England at the end of last year, central cash is being diverted to the most 'deprived' areas, heaping pressure on better-off authorities that have previously managed to keep bills under control. Your browser does not support iframes. Other town halls that currently have below average levies have been told they can apply for 'exceptional' permission to break the long-standing limit. The Tories have condemned the overhaul as a 'naked power grab' to reward 'badly-run Labour councils that spend irresponsibly'.  Westminster, which has one of the lowest average council tax levels in the country, says 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.' Among those hit by the higher bills could be the Prime Minister, who typically pays council tax at their Downing Street residence. Many MPs also have flats in Westminster, funded by the taxpayer.   The Local Government Association said that despite the funding reforms, councils in England are facing a £7billion funding black hole within three years, a gap which is more than the current council spend on roads, transport, homelessness and housing services combined. Band D properties in Westminster are currently charged £1,047 a year in council tax. The five 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 by more than 5 per cent. Meanwhile, the most deprived 10 per cent of councils are seeing a 24 per cent per head boost in central funding.  Details of the settlements for specific councils revealed the percentage change in core spending power from 2024/25 to 2028/29, assuming local authorities increase council tax in line with the maximum of 5 per cent. The Government has brought in a 'fairer' funding system targeting central resources on areas classified as suffering 'deprivation' Birmingham (45.3 per cent), Bradford (46.9 per cent), Barking and Dagenham (47.9 per cent), Coventry (46.5 per cent), Derby (46.8 per cent), Enfield (58.2 per cent), Hillingdon (47.1 per cent), Hounslow (52.1 per cent), Luton (63.4 per cent), Manchester (46.8 per cent), Newham (52.8 per cent) and Slough (47 per cent) were among the biggest winners. Ashfield (-3.8 per cent), Ashford (-3 per cent), Derbyshire Dales (-3.4 per cent), Harborough (-15.8 per cent), High Peak (-4.5 per cent), Horsham (-3.9 per cent), Mid Suffolk (-4.3 per cent), North West Leicestershire (-4.3 per cent), Ribble Valley (-5.5 per cent), Runnymede (-12.5 per cent), and Tonbridge and Malling (-15 per cent) were among the biggest losers. County and district councils - many of which are already teetering on the brink of bankruptcy - have already warned the arrangements will put them under more pressure. No comments have so far been submitted. Why not be the first to send us your thoughts, or debate this issue live on our message boards. By posting your comment you agree to our house rules. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual. Do you want to automatically post your MailOnline comments to your Facebook Timeline? 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