Wandsworth Council’s finance officer has confirmed that it is reliant on the Labour government extending special funding protections that should have ended a decade ago – or face the prospect of council tax bills doubling or even trebling in coming years.
Speaking at a Finance Committee meeting this week, Ms Murray revealed that Wandsworth is still benefiting from “transitional protection” introduced when the Conservative government last reformed local authority funding in 2013. She admitted the council is now desperately campaigning for similar special treatment under Labour’s upcoming Fair Funding Review to avoid a financial catastrophe.
The admission exposes how Britain’s lowest council tax area has been living in a protected bubble for over 12 years, shielded from funding reforms that other councils absorbed long ago, while residents enjoyed exceptionally low bills subsidised by an increasingly outdated system.
Twelve Years of Protection – And Counting
Ms Murray told councillors that Wandsworth still has transitional protection from the changes introduced 12 years ago, adding that the government’s proposal for just three years of protection from the new funding formula changes “doesn’t work for Wandsworth.”
The protection dates back to the introduction of the Business Rates Retention system in April 2013, when the government fundamentally changed how councils are funded. At that time, multiple funding formulae contained outdated data and transitional protections were built into funding allocations to limit sudden changes for local authorities.
These protections were designed to be temporary, but Wandsworth has continued to benefit from them for over a decade while the funding system has become increasingly outdated and unfair to other areas.
The Labour Government’s Reform Challenge
Now, with Labour’s Fair Funding Review set to be implemented from 2026-27, Wandsworth faces losing both its historic protection and confronting a new reality where funding is allocated based on need nationally and local tax-raising capacity.
The scale of the problem became clear during the committee meeting, where Ms Murray was forced to admit that the government is already assuming councils like Wandsworth will have to dramatically increase council tax. The government’s consultation assumes councils will set council tax at £2,000 for Band D properties rather than Wandsworth’s current rate of around £900 – effectively assuming the council will need to double its tax to make up for lost central funding.
But the reality could be even worse. One councillor warned that the council may have to triple or quadruple council tax to make up for lost revenue, and that even with massive service cuts, there would be “no way around” dramatic tax rises.
Faced with this dire prospect, Ms Murray outlined the council’s desperate lobbying strategy. She explained that proving “a three-year transitional protection period just doesn’t work for Wandsworth” would be key to their campaign for extended special treatment.
The council plans to argue it is a special case as “a well run low cost council” with limited scope for making cost savings, and that it needs more time to adjust to the new funding reality.
The Irony of Low-Tax Success
The situation highlights a fundamental irony: Wandsworth’s reputation for fiscal responsibility and the lowest council tax in London has been built on more than a decade of special government protection that has shielded it from the funding reality faced by other councils.
Meanwhile, seven London boroughs now require Exceptional Financial Support from government – the highest rate of any region – with London accounting for almost a third of the national total. Many of these councils have had to absorb funding changes that Wandsworth has been protected from.
What Happens If Lobbying Fails?
If Wandsworth fails to secure extended transitional protection, the council faces stark choices after the three-year transition period ends around 2028:
- Double or triple council tax to maintain current service levels
- Slash services dramatically to match reduced government funding
- A combination of both that would fundamentally change the character of the borough
The government’s Fair Funding Review aims to create a more equitable system based on updated assessments of need and local tax-raising capacity, but for councils like Wandsworth that have been protected from previous reforms, the adjustment could be severe.
A Reckoning Long Overdue?
Critics might argue that Wandsworth’s current predicament represents a reckoning long overdue. The council has enjoyed decades of protection while maintaining the lowest council tax in the country, effectively subsidised by a funding system that other councils have criticised as unfair and which stems all the way back to when Margaret Thatcher was prime minister.
The question now is whether the Labour government will grant Wandsworth another special carve-out, or whether residents who have become accustomed to exceptionally low council tax bills will have to pay closer to what other Londoners contribute to local services.
As the council prepares its lobbying campaign, one thing is clear: the era of Wandsworth as the low-tax outlier may be coming to an end, and we should all prepare for a very different financial reality in the years ahead.
The Fair Funding Review consultation closes in the coming weeks, with new funding arrangements set to take effect from 2026-27. Wandsworth Council declined to provide additional comment beyond the statements made at the public committee meeting.
