A wealthy West London borough has voted to reduce financial support for some of its most vulnerable working-age residents, a move it directly attributes to reductions in central government funding.
Budget Black Hole Forces Tough Decisions
Kensington and Chelsea Council approved a 10% cut to its local council tax support scheme during a Cabinet meeting on Tuesday, January 13, 2026. The change is set to take effect in the upcoming 2026/27 financial year.
The council stated the difficult decision is necessary to help address a projected budget shortfall of £108 million, a figure that has grown from an earlier estimate of £82 million. Officials blame this escalating gap on recent changes to the way Whitehall funds local authorities across England.
Presenting the measure, the council's finance lead, Cem Kemahli, said the authority had little choice but to reduce its relief programme. The cut is expected to save the council £441,000 annually.
Impact on Low-Income Households
The reduction means approximately 5,000 residents who previously received full support will now have to pay council tax for the first time. The annual amount they will be required to contribute is estimated to be between £123 and £164, depending on their property's council tax band and their living situation.
A council report acknowledged the change will likely have a disproportionate effect on low-income and vulnerable individuals. The analysis was complicated by a recent cyber attack which limited officers' access to detailed demographic data on current relief recipients, forcing them to rely on alternative sources.
The council's own public consultation, which received 546 responses in October 2025, revealed significant opposition. Almost two-thirds (62%) of all respondents opposed the changes, with that figure rising to 77% among those currently receiving the support. Furthermore, 86% of beneficiaries said a 10% reduction would have a large impact on their finances.
Consultation Feedback and Future Tax Rises
Many consultation respondents suggested alternative savings or income-raising measures, such as reducing internal costs, increasing charges on higher-value properties or second homes, or generating additional commercial income. The council confirmed it is already pursuing such strategies.
Looking ahead, the council report highlighted new flexibility from the Ministry of Housing, Communities and Local Government. It allows hard-pressed authorities to increase council tax by more than the standard 5% cap without holding a local referendum in the 2027/28 and 2028/29 financial years.
The government's new funding formula even assumes boroughs will add an extra £150 charge on top of the 5% rise. However, Kensington and Chelsea has not yet decided whether to implement this additional charge on its residents. The council has pledged to closely monitor the impacts of the newly approved relief cuts.
It is important to note that the changes do not affect pensioners, who remain protected by a separate, statutory national council tax relief scheme.
