Westminster City Council will use £19.7m from reserves to balance its books but it will impose a 2 per cent rise in the social care precept
Westminster City Council has voted to freeze its share of tax for the year ahead but has been accused of “political opportunism” for using reserves to balance the budget instead.
The Labour-led local authority is facing large budget gaps over the next three years largely due to the Government’s recent Fair Funding Review.
The administration’s budget, which will see significant investments in areas from housing to climate initiatives, does not include a hike to the core part of council tax for 2026/27, however a 2 per cent rise in the social care precept – a ring-fenced budget for adult social care – will be imposed.
With the local elections looming, the Conservative opposition has lambasted the use of almost £20 million of reserves to balance the budget, suggesting it’s a ploy to win votes while reducing the council’s financial resilience.
Tory group leader Cllr Paul Swaddle described it as a “pay nothing now, pay a lot later scam that insults the intelligence of every person in this City”.
Following the meeting, Council Leader Adam Hug praised the budget for delivering “real investment where it matters most – in our communities, revitalising our high streets and tackling inequalities”.
The backdrop to last night’s budget was the hit to Westminster’s finances following the Government’s Fair Funding Review. Council documents revealed the local authority is expecting an £87.8 million budget gap by 2029, a large chunk of which (£75.6m) will be due to a drop in Government funding.
The planned use of £19.7m from its reserves for 2026/27 was described as “unusual” in a paper which went before Cabinet last month, though not a cause for concern on its own.
Officers have however warned the local authority faces difficult decisions, writing that the one-off use of reserves “will not be able to solve the financial challenge faced by the council going forward”.
A key headline from the budget was the proposal to freeze the council’s share of tax for the year ahead, though the adult social care precept is still to rise by 2 per cent. Already a low-tax council, the increase is equal to a 20p weekly hike for a Band D property.
Where will money be spent?
The local authority is also to push ahead with £350m of investments in housing and regeneration schemes, including the delivery of 300 new homes and a community hub at Lisson Grove, plus funding to make Regent Street greener and more accessible.
Cllr Hug introduced the budget with a series of notable Labour investments since the 2022 elections, including the expansion of universal free school meals, installing new CCTV cameras and boosting its housing service, noting last year’s high rating from the regulator.
Acknowledging the sharp cuts to Government funding, he said: “This is set against a still challenging financial backdrop. Over the next three years the grant funding received by the council will reduce by around £75m. But with strong financial stewardship, our innovative transformation programme is reinventing the way our council works.”
Cllr Hug also reiterated a promise not to increase the combined council tax and adult social care precept above the standard 4.99 per cent, despite Westminster being one of several local authorities granted special dispensation to do so in 2027/28 and 2028/29.
On Oxford Street, and London Mayor Sir Sadiq Khan’s plans to pedestrianise part of the highway, he said the approach “is not one that Westminster would have chosen, but we also know that delivering meaningful influence means being at the table, not merely shouting from the sidelines”.
Cllr Swaddle opened his address by telling the chamber: “64 days. That’s all that stands between Westminster residents and the chance to pass their verdict on this failing administration.”
The opposition leader drew attention to what he said were examples of poor financial management by the Labour group, including the millions “wasted” in relation to contractor Geoffrey Osborne going bust.
Cllr Swaddle also attacked the proposed use of reserves over the coming year. He said: “Westminster are raiding £19m in reserves, taxpayers’ money put aside for genuine emergencies, to create the illusion of low council tax. This is nothing more than a pre-election gimmick.”
Cllr Paul Fisher, who defected from Labour to the Conservatives last April, similarly accused the administration of “political opportunism” with its freezing of the tax.
“I just want everyone in this room…to ask themselves quietly, whether this Labour administration would be freezing council tax in a year that was not an election year. We all know the answer to that question.”
Cllr Fisher added that there are “unprecedented” challenges down the road, from temporary accommodation and adult social care costs to the gaps left by the Fair Funding Review, and that the decisions made in the budget were “reckless”.
Cllr Alan Mendoza, one of two Reform members on the council, said the local authority had received the worst deal from the Fair Funding Review, something he added was an “indictment” of the Labour group.
On the use of reserves rather than cuts to meet the budget gap, he said: “Instead you have left it for the next administration. I wonder why that is? We all know an election is coming. You clearly have no confidence that you will be the next administration. You would like others to pick up the mess your Government has left.”
At one stage Reform councillor Laila Cunningham requested a point of personal explanation in a heated exchange, after Labour member Max Sullivan in his own speech said he would not “stoop” to her level and suggest her family vote as a block.
Cllr Cunningham, who is Muslim, asked why her family had been mentioned by Cllr Sullivan and the insinuation behind his comment.
Cllr Sullivan clarified he had said he would not suggest Cllr Cunningham’s family vote collectively, noting the context being Reform’s comments following the recent Gorton and Denton by-election.
A proposed Conservative amendment included savings such as £500,000 from “fast-tracked staff efficiencies” and £250,000 from the Resident Engagement Budget to pay for more uniformed patrols, and a legal fund to consider a challenge to the Mayor’s Oxford Street plans.
This was, however, voted down by a majority of members, with the Labour budget passed along party lines.
Cllr Hug said following the meeting: “This budget delivers real investment where it matters most – in our communities, revitalising our high streets and tackling inequalities.
“We are able to deliver these schemes while keeping council tax low because of strong financial management and a transformation programme that is reshaping how the council works.
“Over the past year, our strategy has delivered real progress for residents, and this budget builds on that momentum – creating more affordable, high-quality housing, strengthening our local economy, improving our environment and supporting thriving communities.”
Want more from MyLondon? Sign up to our daily newsletters for all the latest and greatest from across London here
