Residents in the London Borough of Newham have been spared a steep 9% increase in their council tax for 2026, after a last-minute boost from the government's funding review. However, a standard 4.99% rise is still planned, alongside a series of service cuts and higher charges for residents.
Funding Review Eases Budget Pressure
In a significant shift, Newham Council has abandoned plans to seek permission for an 8.99% council tax increase, which would have been the second major hike in consecutive years. The change follows the government's Fair Funding Review, which adjusted how grants are allocated to local authorities.
The review, published just before Christmas, uses updated population data and new measures of deprivation that better account for housing costs. For Newham, this means its funding package for the 2026/27 financial year is now set at £352.5 million – a welcome £30.8 million more than the council had pessimistically forecast last October.
Councillor Zulfiqar Ali, Newham's cabinet member for finance, described the new formula as a "significant step towards rectifying years of systematic underfunding." He stressed that the underfunding had "affected real people in our community every single day."
Lower Rise, But Cuts and Charges Loom
Despite the improved financial outlook, the council's draft budget still outlines a challenging path. The proposed 4.99% council tax increase is the maximum allowed without a local referendum and aligns with most other London boroughs.
Cllr Ali acknowledged the rise would "be difficult for many households already facing cost of living pressures," but said it made a necessary contribution to maintaining services. He pointed out that even with the increase, Newham will retain the lowest council tax in outer London.
To balance the books, the council must still find £23.5 million in savings over the next five years, on top of £51 million already being implemented. Key proposals in the draft budget include:
- Closing at least one children's centre site and merging others with family hubs to save £1 million.
- Reducing council tax discounts for the poorest households from 80% to 70%.
- Moving to fortnightly waste collections for general rubbish.
- Increasing the cost of parking fees and permits.
- A proposed 4.8% rent increase for council housing tenants next April.
Next Steps for the Budget
The council's cabinet is scheduled to discuss the draft budget plans on Thursday, 8th January. Following this, the final budget will be put to a vote at a meeting of all councillors on Thursday, 26th February.
The situation marks a reprieve from the more severe cuts and tax hikes feared last autumn when the council faced a predicted £53 million funding gap. While the Fair Funding Review has provided crucial breathing room, the need for ongoing savings indicates that financial pressures on local services in Newham are far from over.
