Concerns Mount Over Potential 27% Council Tax Hike in London Under Angela Rayner’s Redistribution Plan

Published: 10th June 2025. The English Chronicle Online

A storm of political and public concern is gathering over proposals linked to Deputy Prime Minister Angela Rayner’s ambitious redistribution plan, which critics claim could lead to a dramatic rise in council tax bills across several London boroughs. At the heart of the debate lies a recalibration of local authority funding which aims to shift financial resources from affluent areas in the South, particularly London, to historically underfunded regions in the North of England.

The initiative, framed by Rayner as a “progressive” rebalancing of local government finances, is intended to ensure that central government money is distributed according to social need rather than local wealth. However, the ripple effect of this policy is already being felt in the capital, where boroughs such as Kensington and Chelsea are facing bleak financial projections. According to estimates reported in The Times, the council may be looking at a £30.1 million shortfall in the financial year 2028–29, a gap that would require an extraordinary 27.4% increase in council tax if it were to be bridged without severe cuts to public services.

While there is currently no official plan to implement such a steep tax rise, the figures have ignited fierce debate over the implications of the funding changes. Critics argue that London, despite being wealthier in aggregate, contains deep pockets of deprivation and complex service demands that make uniform cuts dangerous and regressive. In a borough like Kensington and Chelsea, which encompasses both affluence and extreme poverty side by side, council leaders fear that the consequences will be sharply felt by the most vulnerable residents.

Elizabeth Campbell, the Conservative leader of Kensington and Chelsea Council, did not mince her words in describing the new policy direction. She warned that the proposed funding formula amounts to “drastic redistribution of resources that will hit inner London boroughs hardest” and accused the government of punishing prudent financial management. “Every council that benefits is outside the capital,” she said. “This is not fair funding — it is selective defunding.”

The anticipated impact extends well beyond one borough. Westminster, Wandsworth, Richmond, Hammersmith and Fulham, Islington, Camden and the City of London have all been identified as areas likely to face increased financial pressure. Under current rules, councils responsible for social care can raise council tax by up to 4.99% annually without the need for a referendum, while others are limited to 2.99%. Exceptions can be made under special government authorisation, as seen earlier this year when Bradford Council was permitted a 10% rise, and Newham and Windsor and Maidenhead were both allowed 9%.

The possibility of such permissions becoming more common — or even necessary — has prompted a wider reaction. London Councils, the cross-party organisation representing all 32 boroughs and the City of London, has voiced deep unease over the direction of travel. A spokesperson stated that they are “deeply concerned the government’s proposals could leave London boroughs in an even worse position,” suggesting that the capital’s complex service demands are being overlooked in the push for regional rebalancing.

At the national level, the Ministry of Housing, Communities and Local Government has attempted to calm fears. In a statement, a spokesperson dismissed the notion of a 27% rise as speculative and unfounded, adding that current council tax thresholds — including the social care uplift — remain in place under principles set by the previous Conservative government. Any increase above those limits would, they emphasised, require both central government approval and a local consultation process.

Still, questions remain about the long-term sustainability of the current model and the balance between fairness and function in local governance. The Ministry maintains that the funding proposals are intended to reflect the differing levels of demand and the varying costs of service delivery across the country. A formal consultation is ongoing, but tensions are rising as local leaders await clarity on what these changes will mean in practical terms.

Supporters of the redistribution argue that the system has long favoured more prosperous areas while under-resourcing communities in the North and Midlands. They see Rayner’s plan as an overdue correction to historic imbalances that have stunted growth and denied basic services to disadvantaged towns and cities. Yet the challenge remains to deliver equity without destabilising regions that, while wealthier on average, still face immense challenges of their own.

As the consultation process continues, Angela Rayner’s office has declined to comment in detail, though sources close to the Deputy Prime Minister insist the changes are being designed with both fairness and pragmatism in mind. For now, the debate serves as a sharp reminder that the politics of redistribution — however well-intentioned — are rarely straightforward. In a country as economically divided as the United Kingdom, any attempt to move public money from one region to another risks igniting fierce resistance.

London’s political leaders are now bracing for what could become a significant confrontation between the capital and central government. Whether the feared tax rises materialise or not, the broader conversation about how and where public money is spent — and who is asked to pay for it — is once again front and centre in British politics.