Putney residents are facing a steep rise in council tax bills from 2026 as part of a sweeping overhaul of local government funding announced by the Labour government.
The new funding formula, published for public comment, is designed to redistribute around £2 billion from wealthier areas — especially in London and the South East — to more deprived communities in the North and Midlands. For councils like Wandsworth, where Band D bills are just £998, the shift could mean millions in lost central government support.
The government plans to assess funding on the basis of a “notional” Band D council tax level of £2,000 — roughly double what Wandsworth currently charges. Not only that but the rules that currently prevent increases of more than 4.99% without a referendum may be lifted, meaning that Putney residents could be hit with double-digit council tax increases without having a say.
“Some inner London councils — particularly Wandsworth and Westminster — set much lower bills than this currently, and might see large cuts to the amount of funding they receive from central government,” said Kate Ogden of the Institute for Fiscal Studies, quoted in the Evening Standard.
Why Council Tax Is So Low in Wandsworth
Wandsworth has long prided itself on having the lowest council tax rates in the country, a legacy of decades of Conservative control that saw the borough privatise services, sell off assets, and keep tax rates low to appeal to voters.
That strategy was enabled by outdated funding formulas and generous central government grants, which once made up nearly half of council income across England. Wandsworth also benefited from retaining large amounts of business rates and housing capital receipts.
Under Labour’s new plan, those advantages are being stripped away.
“The combination of the two changes will mean steep falls in grant income for wealthier councils, mainly in London and the South East, forcing them to either raise council tax rates to make up the shortfall or cut public services,” reported The Telegraph.
Political Pressures and Financial Realities
Wandsworth’s Labour-run council has tried to maintain the low-tax legacy, even going so far as to declare a council tax “freeze” in 2024/25 while actually increasing rates by 2%. The political calculation was clear: residents expect low bills, and Labour cannot afford to appear tax-happy in an area where it only narrowly took control.
But the reality is catching up.
Alongside the cut in government funding, Wandsworth faces:
- Soaring housing and disrepair costs, including legal claims.
- Exploding SEND deficits, with the borough among many facing a financial black hole.
- Depleted reserves, used up to soften recent budgets and raising the risk of a debt ticking timebomb.
“Without urgent solutions… councils grappling with unsustainable high-needs costs… may, at best, be forced to make further reductions in essential services, and at worst, risk declaring themselves effectively bankrupt,” warned Iain Murray of CIPFA in the Guardian.
Will the Council Tax Cap Be Lifted?
Currently, councils must hold a local referendum to raise council tax by more than 4.99% a year. But according to The Times, “Ministers have signalled they will look more favourably on applications from wealthier areas with historically low council tax rates.”
That suggests councils like Wandsworth could be granted special permission to raise taxes beyond the legal cap, without a referendum, to avoid financial collapse.
These reports have not yet been confirmed in official guidance, but the tone of ministerial briefings and the scale of redistribution proposed indicate a shift is likely.
David Phillips, of the Institute for Fiscal Studies, said reform was overdue. “It’s been 20 years since we’ve had an effective system to allocate funding between councils so it is out of whack and the changes are going to be big.”
But he also specifically pointed to Wandsworth as a net loser through the approach proposed by the Labour government.
“We would expect urban areas in the Midlands and north to benefit, and maybe some of the east London boroughs. But the Westminsters and Wandsworths of this world, which set very low council tax, will lose. If the referendum limit remains at 5 per cent they will be stuck, so the government needs to give them some flexibility to put up their council tax beyond that.”
Political Timing
Conveniently for the Labour administration at Wandsworth Town Hall, the biggest changes won’t bite until after the next local elections in May 2026. That means Putney residents won’t see the worst of the tax rises before casting their votes.
But the direction is clear: years of low council tax have come at a cost — and the bill is now coming due.
