More details emerge of Londoners facing higher bills due to the cash crisis affecting many boroughs
Sir Sadiq Khan has raised the alarm over impending financial hardships for some of London’s most vulnerable residents as changes to council tax benefit schemes loom. He warned that carers, lone parents, and disabled Londoners are among those at risk of being forced to pay council tax for the first time, due to budget pressures faced by borough councils.
The mayor called the current council tax support system “increasingly unsustainable and inequitable within London” and urged the Government to reassess the rules and funding structure.
This comes after reports from The Standard revealed that thousands of the capital’s poorest residents are set to face council tax demands for the first time, as boroughs attempt to mitigate severe financial shortfalls.
Vulnerable groups face the brunt
According to City Hall documents, carers, lone parents with children under five, and individuals receiving disability benefits may soon be required to contribute to council tax bills – including a portion directed to City Hall.
In extreme cases, working-age families residing in larger properties in the capital’s costliest boroughs could see annual council tax bills soar to as much as £3,000, despite being on benefits.
At present, pensioners and students are eligible for full council tax relief, funded by the Government. However, working-age Londoners depend on locally administered schemes that vary significantly between boroughs.
Budget cuts and increased contributions
Approximately half of London’s 33 boroughs are considering changes to their council tax benefit schemes, set to take effect from April. These proposals, driven by a need to cut costs, could see some of the city’s lowest-income households contributing up to 50% of their council tax liability, compared to the current 20–30%.
In some areas, households currently exempt from payments could find themselves liable for up to 35% of their bill. Central and inner London boroughs may continue to offer 100% support to their lowest-income households, highlighting the disparities in support provision across the capital.
Sir Sadiq Khan’s draft budget for 2025/26 includes a proposed 4% increase in the mayoral share of council tax bills, with the additional funds directed towards the Metropolitan Police. However, the budget also acknowledges the impact of these changes on vulnerable groups.
“The lowest income working-age households could see increases in the sums they are required to pay,” the draft states, adding that carers, lone parents with young children, and disabled individuals are likely to be among those most affected.
Pressure on marginalised groups
The report highlights the disproportionate impact on those whose financial circumstances place them just above the threshold for council tax support eligibility. These individuals, who already have low income and savings, include higher proportions of disabled people, ethnic minority groups, and families with young children compared to the broader population.
City Hall’s analysis also warns that even marginal increases in council tax could significantly reduce disposable income for these groups, compounding existing financial pressures.
Calls for government action
Sir Sadiq has reiterated his call for the Government to reform the local government finance system, arguing that the current model places undue strain on boroughs and fails to adequately protect vulnerable residents.
“The current system of localised council tax support has become increasingly unsustainable and inequitable within London,” the documents state. “This is an issue the government should consider as part of its planned reforms to the local government finance system.”
As boroughs prepare to implement the proposed changes, campaigners and local leaders are urging a rethink to ensure that London’s most vulnerable residents are not left bearing the brunt of the financial crisis.
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Unequal burden
The potential disparity in council tax support across London’s boroughs underscores the inequity of the current system. While some boroughs may shield low-income households from any increase, others are likely to demand significant contributions, exacerbating financial inequality across the capital.
Critics argue that the Government must step in to provide greater funding and ensure a more uniform approach to council tax support. Without intervention, many fear that the changes will disproportionately harm those who can least afford to pay.
The looming changes have placed the spotlight on the challenges faced by local councils in balancing their budgets, while ensuring that the city’s most vulnerable residents are not left behind. As the April deadline approaches, the debate over council tax support is likely to intensify, with pressure mounting on both local and national governments to find a fair and sustainable solution.
