Three Conservative leaders of London boroughs have written to Prime Minister Andy Burnham accusing his government of forcing steep council tax rises on low-tax areas and then leaving town halls to take the blame, in a letter reported by the Press Association and carried by the BBC on Thursday.
The leaders of Westminster, Wandsworth and Kensington and Chelsea say the government's Fair Funding Review 2.0, which redirects grant money towards more deprived areas, leaves their councils with a choice between raising bills sharply or cutting local services. The letter has not been published in full by any of the three councils or by Downing Street.
The formula, the leaders write, "punishes low tax councils". They add: "If our councils do not impose council tax rises, our communities face considerable cuts in funding for local services."
"This is not just devolving blame, it is devolving council tax rises and government cuts... This is fiddled funding, cooked up in Whitehall but leaving town halls to carry the blame."
At the centre of the complaint is a technical claim that is checkable against the settlement papers: the leaders say the Ministry of Housing, Communities and Local Government "assumed massive rises in council tax" in their areas when it published the multi-year finance settlement. "It's clearly not a local decision if the tax rises have already been baked into the finances by the Government," they write.
The settlement, published in provisional form last December, granted six authorities two-year freedom from the referendum principles that ordinarily cap rises at 5 per cent. They are Kensington and Chelsea, Westminster, Wandsworth, Hammersmith and Fulham, the City of London and Windsor and Maidenhead — all upper-tier bodies with below-average council tax and 95 per cent of their funding protected during the transition. Band D bills in the five London authorities currently sit between £450 and £1,280 below the England average.
The leaders also object to the High Value Council Tax Surcharge announced in the November Budget, which from April 2028 will levy between £2,500 and £7,500 a year on English homes worth £2m or more. "These tax rises are in addition to the new top-up council tax on many homes in our councils," the letter says, "and none of the revenues from this tax penalty will be retained by councils or by the Mayor of London." The surcharge, forecast to raise around £430m a year, is paid to the Treasury, though the government has said it will support local government funding in aggregate.
A government spokesperson said: "We're fixing an outdated funding system so funding goes where need is greatest. For too long, some of the wealthiest parts of the country have benefited from exceptionally high levels of government support while communities facing greater pressures lost out." Ministers say the reforms protect councils through the transition and that no area faces a cliff edge, with £78bn available to English councils next year.
Sir James Cleverly, the shadow communities secretary, said "true devolution" could not mean imposing high council taxes "from on high", and that "London's taxpayers are being forced to pay a Burnham penalty on their council tax".
Independent analysis is more mixed. The Institute for Fiscal Studies has called the reforms welcome, noting England has lacked a rational allocation system for around two decades, but found that 43 per cent of councils face real-terms funding falls over three years, including 67 per cent of inner London boroughs. It had also recommended giving low-tax authorities extra flexibility to offset losses.
Figures circulating for individual boroughs vary widely and none has been formally adopted. Westminster's consultation cites a 200 per cent rise only as a scenario in which the council changed nothing about its spending; its leader warned in June of up to 75 per cent. Reports of a rise of up to 160 per cent in Wandsworth originate with PoliticsHome and remain second-hand.
All three signatory councils changed hands or leadership within the past four months. Control of Wandsworth turns on a by-election in Trinity ward on 27 August.
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