Richmond Council is taking the government to court over funding reforms that could cost it up to £45 million annually, in a legal challenge that highlights a funding crisis we also face in Wandsworth.
The Liberal Democrat-run council has sent a pre-action letter to Housing Secretary Steve Reed, outlining plans to seek a judicial review of the consultation process for the Fair Funding Review 2.0. The reforms, set to take effect in 2026/27, aim to redistribute funding across English councils.
Richmond claims the changes could see it lose over 90 per cent of its current funding, making it the worst-hit local authority in England by percentage. The government disputes this figure, with a Ministry of Housing, Communities and Local Government (MHCLG) spokesperson saying: “We do not recognise this figure.”
Wandsworth faces parallel threat
The legal action comes as Wandsworth Borough Council faces its own funding crisis under the same reforms. The council has warned repeatedly this year that without a special exemption being extended, council tax bills in the borough could double or even triple.
Wandsworth currently benefits from a funding arrangement that has historically kept its council tax among the lowest in London. The Fair Funding Review threatens to eliminate this special treatment, forcing the council to choose between massive service cuts or dramatic tax increases.
In June, the council warned residents about a fiscal “cliff edge” as council tax bills were set to soar. By July, it had confessed that without a special deal, bills could triple. Analysis by the Institute for Fiscal Studies in August suggested residents would be paying significantly more over the next three years.
‘Devastating’ impact claimed
Richmond Council Leader Gareth Roberts said the authority had saved nearly £50 million since 2018 through efficiency measures, but argued the funding formulae would punish financially responsible councils.
“This review risks punishing councils like Richmond for running its finances responsibly,” Roberts said. “We cannot stand by while our community faces potentially devastating cuts to the services people rely on.”
The council wants the government to release the impact models used to predict the reforms’ effects and to revisit the proposed funding formulae. It criticised the timeline, noting councils had been given less than three months’ formal notice to prepare for cuts of this scale.
Councillor Jim Millard, Richmond’s Lead Member for Finance, called the process “rushed, opaque, and deeply unfair” and demanded the government publish its funding model.
Government defends reforms
The MHCLG defended the changes, saying they would make funding “fairer and simpler by targeting cash where it is most needed.”
“We are committed to fixing the outdated and unfair funding system so funding finally matches local people’s needs and demands on services,” a spokesperson said. “Our reforms will mean people in areas previously left behind will get the vital public services they deserve from their local council.”
The ministry is expected to publish its response to the consultation and confirm distribution methods in the coming weeks.
Other affluent London councils are also facing significant losses. Kensington and Chelsea Council says it faces an £82 million funding cut between now and 2030.
Richmond is now waiting for the MHCLG to respond to its pre-action letter. If no resolution is found, it will seek a judicial review where a judge will assess whether the consultation process was lawful.
If as rumoured next week, housing in the top three council bands will get hit by a mansion tax. With this funding loss and a mansion tax hit combined, it’s going to slap people with thousand and thousands of pounds more to find.
What a disaster of a government.