Maximum Council Tax rise highly likely in new year, says Hounslow Council Leader

Image above: Cllr Shantanu Rajawat

Lack of government funding “essentially coerces” local authorities into maximum rises, says Cllr Shantanu Rajawat

The Leader of Hounslow Council, Cllr Shantanu Rajawat, has issued a stark warning about the challenging financial landscape facing local authorities across London, but given the shaky finances of some local authorities, he also sought to reassure residents that LB Hounslow was not on the brink of bankruptcy.

In the aftermath of the latest round of government funding, which saw a 6.1% annual increase, several London local authorities have raised the alarm, saying they are close to  having to resort to drastic measures, such as filing a Section 114 notice and providing only essential services.

Cllr Rajawat ruled out Hounslow taking such extreme measures but acknowledged the likelihood of a maximum 4.99% rise in Council Tax next year. He put the blame squarely on the structure of local government funding that he says “essentially coerces” local authorities into such moves.

In an interview on BBC Radio London, he expressed disappointment with the outcome of Michael Gove’s lobbying for increased funding for local councils. The announcement on 18 December left Cllr Rajawat ‘really disappointed’, stating that each passing year presented greater challenges in balancing the borough’s books.

Despite this, Cllr Rajaway said Hounslow often challenges tough decisions early and head-on, distinguishing it from other councils facing fiscal turmoil.

The financial strains on local governments are multifaceted, stemming from rising costs in adult social care, homelessness, and special needs education. This financial pressure has resulted in a series of ‘bankruptcies’ among councils, irrespective of their political affiliations.

London Councils anticipates a substantial funding shortfall of at least £500 million, a deficit that could significantly impact local services throughout the capital based on the provisional Local Government Finance Settlement for 2024-25.

Image above: Hounslow House

“Deeply disappointing”

Cllr Rajawat added:

“It’s deeply disappointing that the Government has failed to recognise the ongoing strain and increasing demand on council services with the 2024/25 settlement.

“Chronic underfunding for the last 10 years has seen our budgets and services stretched and squeezed. Despite urgent calls to address the skyrocketing costs and financial distress every borough is experiencing, they have failed to listen or recognise the damage done by a wave of reckless policies which have caused a crisis in health, social care, the asylum system and temporary accommodation.

“With rising costs pinching households’ every penny, Hounslow, like many local authorities, have been shouldering the responsibility to provide the additional support residents need.

“Sadly, the proposed local government funding settlement is calculated on the assumption that London Boroughs will put up Council Tax by a maximum of 4.99%, which provides more than half of the additional funding in Hounslow’s settlement. If this proposal goes ahead, we will face the stark choice of either putting up Council Tax or having a significant budget shortfall. Once again, the Government is placing further strain on hard-pressed citizens. “

Cllr Claire Holland, Acting Chair of London Councils, said:

“We are deeply concerned 2024 looks set to be another year of massive budget pressures and a continuing squeeze on Londoners’ local services.

“The measures announced by the government fall short of what we need. While the funding deal will bring some relief, it won’t be enough to plug the budget gaps we face and restore stability to town hall finances.”

To hear the full interview with Cllr Rajawat the on BBC Radio London Breakfast show listen here from 10:47.