Borough leaders challenge ‘unfair’ Government funding

The letter warns that local authorities which have historically kept Council Tax low through sensible financial choices, are now being penalised through a deeply flawed central government funding formula, forcing them to substantially increase Council Tax. 

Wandsworth residents make some of the largest contributions in the country to the public purse. Our residents are responsible for paying some of the highest amounts in the country of income tax and stamp duty, whilst making relatively low demands on welfare and unemployment support. 

• In 2023/24, Wandsworth residents paid £4.6bn in income tax -nearly £14,000 per head, Three and a half times the national average. 
• In 2024/25, Wandsworth residents paid £285m in Stamp Duty on property sales, the fourth highest level of any local authority, equivalent to 2% of the total raised nationally. 
• Wandsworth businesses paid £158m in business rates – the 36th highest nationally 
• Wandsworth’s unemployment rate is 3.7% versus 4.6% nationally. 

Wandsworth’s combined income tax, business rates, and stamp duty payments totalled over £5bn a year, yet the council only received £217m in revenue funding from the Government in the Local Government Funding Settlement – equivalent to four pence in every pound.  

Despite that net positive contribution, Wandsworth is facing some of the deepest reductions in government support anywhere in the country, with the burden being forced onto residents. 

Cllr Morritt stated: "Wandsworth residents are proud to play our part in supporting the UK, but now we are being robbed – our money taken to subsidise badly run councils in other parts of the country.  

Government financial support to Wandsworth has been slashed by 40% over the next four years. In cash terms, this means we’ve already received £19m less in funding this year and will be receiving £84m a year less by 2030. The Government’s assumption when calculating the funding cut for Wandsworth, was that Council Tax would increase substantially."

Councillor Peter Graham, Cabinet Member for Finance said:  

“The Government is forcing Wandsworth to increase Council Tax, which it knows is the only realistic way to recover funding.

“This overstep has taken the decision out of our hands. We will reduce local spending, but that will only get us so far, given the scale of the Government's cuts. We have to deliver the core services that matter to our residents.” 

Share your views about how we should reduce spending 

Cllr Morritt added: “The Government’s so-called "Fair Funding Review" is becoming the unfair funding review for communities like ours. The new funding arrangements treat low-tax councils as a problem that needs to be corrected through higher taxation, whilst rewarding badly run councils elsewhere with increased funding. 

“The Government's unfair funding review takes money away from councils that have managed their finances responsibly and kept taxes low. At the same time, proposals such as the mansion tax that I wrote to government about, would ask our residents to pay even more, while councils like ours, don’t get a penny.”

The double hit of the mansion tax 

The proposed High Value Council Tax Surcharge is commonly referred to as the mansion tax, and is set to begin in April 2028, costing some Wandsworth homeowners an additional £2,500 to £7,500 per year. 

Although the surcharge will be collected by local councils, the resulting income will be kept by government, meaning councils see no direct financial benefit to support residents and frontline services.

Cllr Morritt said: “This cannot be right. Our residents contribute more than most. They should not be milked again and again." 

“We are calling for Government to rethink their unfair funding review, and reconsider flawed policies which negatively impact the parts of the country that already give so much. Ahead of the Budget which will be announced on 28 October, we insist that this funding cut should be withdrawn.”