Westminster City Council was warned it faced tough decision ahead
A Central London council is freezing its share of council tax for 2026/27 and using £19.7m in reserves to balance the budget. Westminster City Council said the pause will help residents deal with cost of living pressures. The council has one of the lowest council tax rates in the country.
The adult social care precept, which funds care for the elderly and disabled, will increase by 2per cent, which equals 20p a week extra for Band D payers – or, £10.54 a year – according to a council report. The Greater London Authority precept is rising by 4.1pc and will cost Band D households an extra £20.13 a year.
Westminster City has also proposed £59m in savings by 2029. This includes £3m in “transformation” programmes and reducing employer pension contributions by £8m following three years of “good investments”. It is also expected to collect £8.6m from a tax on second homes and rake in £4.6m from increased prices to fines.
Other savings include:
- The use of AI to automate front door functions in Adult Social Care, £300k by 2029
- £300k in savings from Universal Free School Meals
- Charging utility firms and other contracts to carry out street works, £1m by 2029
- Boosting commercial waste income by £1.3m in 2026/27
- £1.21m in additional income from Leisure contracts
- An estimated £4.39m from indexed fees and charges
- £8.6m from additional enforcement of parking and other fines in 2026/27
- £100k from withdrawing the emergency grants programme from the Environment and Communities portfolio
- £1.1m in transformation and efficiency reviews as well as staffing reviews and structure in 2026/27. This could jump to £6m by 2029.
- £1.5m by extending controlled parking zones to evenings and weekends
Other savings are said to be more complex and involve redesigning services and long-term investment in technology and prevention strategies, a budget report before the Cabinet shows.
The council expects a £87.8m budget gap by 2029 with a large chunk of this – £75.6m – being caused by a drop in annual Government funding due to the Fair Funding Review. The budget gap does not include any increase in the council tax rate in 2027/28 and 2028/29.
‘This won’t solve financial challenges’
The council will also use £19.7m in reserves to balance the 2026/27 budget – a move its own officers branded as “unusual” but not a cause for concern on its own, according to the same report.
The council said it would use the stockpiled cash because of the late impact of the funding review and because other longer-term actions to stabilise the budget “will not have had the time to make a significant impact”. The council also said its reserves were “adequate” and are forecast to be £318.6m by April 1, 2026.
But officers warned the council had tough decisions ahead to make. They wrote: “The position the Council finds itself in, as one of the authorities with the biggest reduction in grant funding across the country means that the ability to use reserves over the medium term will be crucial to being able to introduce significant change to reduce net spending in a carefully planned way.
“It is clear that one-off use of reserves will not be able to solve the financial challenge faced by the Council going forward.” This was a sentiment echoed by the council’s own budget scrutiny group and the chief of finance.
Westminster City said it is pushing ahead with £350m of investments in new housing and regeneration schemes. This includes £174m to deliver 300 new homes and a community health and well being hub at Lisson Grove and £34m to make Regent Street greener, safer and more accessible.
Cllr Adam Hug, leader of Westminster City Council, said: “Like other local authorities, Westminster City Council is facing significant financial pressures. Due to strong financial management, reinventing the way the Council works and our track record of delivering outstanding services that are value for money, we can keep on target with a string of major investments to make life better for residents.
“Keeping council tax low is just one way we are helping local people with rising bills and the cost-of-living crisis. This Budget represents an ongoing solid and substantial commitment to build a fairer Westminster.
“At the same time, we are lobbying hard to ensure Westminster gets its fair share of the revenue from the Government’s proposed overnight levy. Millions of visitors come to our City every year, and it is right that – like other world capitals – we ask a modest nightly fee to pay for the services they use while here. That money can then be spent locally to benefit local people and businesses.”
Westminster City is one of five London councils granted flexibility to increase council tax by more than five per cent for at least the next two years. The council had repeatedly said this is not something it requested during the consultation process.
It is unclear whether the council will use this option in future years.
Councils typically have to either hold a referendum among residents or get special dispensation from Government to go beyond the five per cent ceiling, though both of these have been waived for other local authorities in the past.
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