Barnet Council in talks to raise council tax above 5% limit

Barnet Council is in discussions with the Government regarding permission to exceed the usual 5% limit on annual council tax increases. The authority is confronting a significant budget shortfall, estimated at £200 million over the next three years. To address this gap, the council would need to implement a 32% increase in council tax, equating to approximately £500 for the average Band D property, over one or more years.

The substantial budget deficit is primarily attributed to increased expenditure on adults' and children's social care services, alongside the provision of temporary accommodation for homeless families. Barnet Council has the largest budget gap among all London boroughs. For the past two years, the council has relied on £135 million in emergency loans from the Government to avoid financial collapse.

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Demographic Pressures and Budgetary Needs

The demographic profile of Barnet, with one in seven residents over the age of 65, contributes to the financial strain. Services for the elderly account for a third of the council's annual budget of £544 million. Simon Radford, Barnet's cabinet member for financial sustainability, stated that the council must prepare for "very painful decisions" and engage in a "brutally honest conversation with residents".

Mr. Radford emphasised the scale of the challenge, noting the necessity to "find £200 million of savings or cost avoidance within three years." He added that while the council is working to reduce demand for statutory services, existing financial levers are insufficient to manage future service needs without national policy changes. He indicated that "none of the levers in our control can tackle the scale of future demand for these services without national policy intervention."

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Broader Context of Council Funding

Barnet's situation mirrors that of other London boroughs. Several authorities, including Lambeth and Bromley, are reportedly in similar discussions with the Government. Other boroughs like Hammersmith and Fulham, Kensington and Chelsea, Westminster, Wandsworth, and the City of London are facing significant council tax hikes, some potentially doubling the levy, due to reduced central government grants following Labour's Fair Funding Review. This review aims to rebalance funding by increasing grants for councils with historically low tax bases. Wandsworth Council, for example, has announced a 94% council tax increase for the upcoming financial year.

A Government spokesperson stated that reforms to the council funding system are underway to ensure funds are directed where most needed, with transitional arrangements in place to prevent abrupt funding cuts.