Westminster City Council is freezing its share of council tax for 2026/27 and using £19.7mn in reserves to balance the budget.
The council, which already has one of the lowest council tax rates in the country, said the pause will help residents deal with cost of living pressures.
However, the adult social care precept, which funds care for the elderly and disabled, will increase by two per cent, which equals 20p a week extra for Band D payers — or, £10.54 a year — according to a council report. The Greater London Authority precept is rising by 4.1 per cent and will cost Band D households an extra £20.13 a year.
Westminster City has proposed £59mn in savings by 2029. This includes £3mn in “transformation” programmes and reducing employer pension contributions by £8mn following three years of “good investments”.
It is also expected to collect £8.6mn from a tax on second homes and rake in £4.6mn from increased prices to fines.
Other savings are said to be more complex and involve redesigning services and long-term investment in technology and prevention strategies, a budget report before the cabinet of senior councillors shows.
The council expects a £87.8mn budget gap by 2029 with a large chunk of this — £75.6mn — being caused by a drop in annual Government funding due to the Fair Funding Review. The budget gap does not include any increase in the council tax rate in 2027/28 and 2028/29.
The decision to use £19.7mn from reserves to balance the 2026/27 budget is “unusual” but not a cause for concern on its own, according to a report by the chief financial officer.
The council said it would use the stockpiled cash because of the late impact of the funding review and because other longer-term actions to stabilise the budget “will not have had the time to make a significant impact”.
The council also said its reserves were “adequate” and are forecast to be £318.6mn by 1 April 2026.
But officers warned the council had tough decisions ahead to make. They wrote: “The position the Council finds itself in, as one of the authorities with the biggest reduction in grant funding across the country means that the ability to use reserves over the medium term will be crucial to being able to introduce significant change to reduce net spending in a carefully planned way. It is clear that one-off use of reserves will not be able to solve the financial challenge faced by the Council going forward.”
This was a sentiment echoed by the council’s own budget scrutiny group and the chief of finance.
Westminster City said it is pushing ahead with £350mn of investments in new housing and regeneration schemes. This includes £174mn to deliver 300 new homes and a community health and well being hub at Lisson Grove and £34mn to make Regent Street greener, safer and more accessible.
Cllr Adam Hug, council leader, said: “Like other local authorities, Westminster City Council is facing significant financial pressures.
“Due to strong financial management, reinventing the way the Council works and our track record of delivering outstanding services that are value for money, we can keep on target with a string of major investments to make life better for residents.
“Keeping council tax low is just one way we are helping local people with rising bills and the cost-of-living crisis. This Budget represents an ongoing solid and substantial commitment to build a fairer Westminster.
“At the same time, we are lobbying hard to ensure Westminster gets its fair share of the revenue from the Government’s proposed overnight levy. Millions of visitors come to our City every year, and it is right that — like other world capitals — we ask a modest nightly fee to pay for the services they use while here. That money can then be spent locally to benefit local people and businesses.”
Westminster City is one of five London councils granted flexibility to increase council tax by more than five per cent for at least the next two years. The council had repeatedly said this is not something it requested during the consultation process.
It is unclear whether the council will use this option in future years.
Councils typically have to either hold a referendum among residents or get special dispensation from Government to go beyond the five per cent ceiling, though both of these have been waived for other local authorities in the past.
The budget for 2026/27 will be put to a vote of the Full Council on 4 March 2026.
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