Westminster Council Freezes Core Tax but Taps Reserves, Sparking Political Clash
Westminster City Council has approved a budget that freezes its share of council tax for the upcoming year, but the decision has ignited a fierce political debate over the use of nearly £20 million from reserves to balance the books. The Labour-led administration, facing significant financial pressures from the Government's Fair Funding Review, opted to avoid a hike in the core tax rate for 2026/27, though a 2 per cent increase in the adult social care precept will still apply.
Budget Gaps and Reserve Use Draw Criticism
The council is grappling with an anticipated £87.8 million budget gap by 2029, largely attributed to a £75.6 million reduction in Government funding. To address immediate shortfalls, the administration plans to draw £19.7 million from its reserves for the 2026/27 fiscal year. This move has been labeled "unusual" in council documents and has drawn sharp criticism from the Conservative opposition, who accuse Labour of "political opportunism" ahead of local elections.
Tory group leader Councillor Paul Swaddle condemned the strategy as a "pay nothing now, pay a lot later scam," arguing it undermines financial resilience and insults residents' intelligence. He emphasized that reserves are meant for emergencies, not for creating an illusion of low taxes.
Investments and Financial Stewardship Highlighted
Despite the controversy, Council Leader Adam Hug defended the budget, stating it delivers "real investment where it matters most." The plan includes £350 million for housing and regeneration projects, such as 300 new homes and a community hub in Lisson Grove, along with initiatives to enhance Regent Street's accessibility and green spaces. Hug highlighted Labour's previous investments, including expanding universal free school meals and improving housing services, while acknowledging the challenging financial backdrop.
He also reaffirmed a commitment not to exceed a combined council tax and social care precept increase of 4.99 per cent, despite Westminster having special dispensation for higher rises in future years. On issues like the Mayor's Oxford Street pedestrianisation plans, Hug noted the council's approach of engaging constructively rather than opposing from the sidelines.
Opposition Voices and Election Tensions
The budget debate was marked by heated exchanges, with Reform UK councillors joining Conservatives in criticizing the reserve usage. Councillor Paul Fisher, a defector from Labour, accused the administration of recklessness and questioned whether the tax freeze would occur in a non-election year. Reform's Councillor Alan Mendoza pointed to the Fair Funding Review's impact as an indictment of Labour's governance, suggesting the budget delays tough decisions for future administrations.
A Conservative amendment proposing savings from staff efficiencies and a legal fund for challenging the Oxford Street plans was voted down, with the Labour budget passing along party lines. Following the meeting, Hug reiterated the budget's focus on community investment, economic strengthening, and environmental improvements, crediting strong financial management for enabling low tax rates.
Officers have warned that the one-off use of reserves will not solve long-term financial challenges, indicating difficult decisions lie ahead for Westminster City Council as it navigates funding cuts and rising costs in areas like adult social care and temporary accommodation.
