Cllr Johnny Thalassites is the Lead Member for Finance, Customer Services and Net Zero on Kensington and Chelsea Council.
More than 95 per cent of councils are set to raise their taxes by 4.99 per cent in 2025/26, the maximum allowed by the Government without holding a constituency-wide referendum. Some other councils will raise their rates even higher – with Newham, for example, calling for inflation-busting ten per cent tax hikes.
Meanwhile, the Government recently announced plans to cut revenue support grants (i.e. central Government support) to local authorities who do not raise their taxes by the 4.99 rate annually, under plans to make “uniform assumptions” about Council Tax rates. The effect of this is that councils who do not raise their taxes by the maximum allowed by Government will be punished with reduced core spending power.
But there is another way. Kensington and Chelsea Council will vote on the smallest Council Tax increase in London this year (four per cent), having agreed the smallest cumulative tax rise in the capital since the most recent set of elections in 2022. This includes a Council Tax freeze in April 2023, amid high inflation, and cost-of-living support grants for the lowest-income households every year during the term.
It has been rough going in recent times for London Conservatives. Some of that is about the see-saw of democratic politics; some of it is about demographic change; and some of it is certainly about losing touch with Londoners’ core values. And so, part of any London Conservative comeback must be built upon values we know resonate with people, especially given the rising cost-of-living. Keeping taxes low, reducing barriers to services, and competence.
That is why we have started a transformation and savings programme all about minimising costs to residents and reducing barriers to services – making it easier for residents to access our services and getting out of the way where they don’t need us. The programme has delivered £16m of savings this year, building on more than £10m of savings in each of the past two years.
The work we have done includes introducing digital parking permits, with subscription and direct debit payments coming in summer 2025, saving residents’ and officers’ time, with them previously spending needless hours on the phone or in the customer services centre for routine renewals. This is an example where we can deliver an existing service – a whole borough parking permit, much loved by residents – in a new way – using technology to make our systems work better. The upshot of this is: we are living our values, spending within our means, and ensuring people can keep more of their hard-earned money with smaller tax rises, only levied when absolutely necessary – and we are improving services for those who really need it.
There are major headwinds in local Government, including the rising cost of temporary accommodation and social care for adults and children. There are also things councils will understandably want to spend more on, such as clean streets (we have grown our street cleaning budget by £750,000 this year, and ringfenced the twice-weekly bin collection service). This is why we agree with the many local authorities who are calling for more predictability in Government funding settlements – the current system means councils find out their annual grant the week before Christmas, just 6-8 weeks before the budget is going through internal signoffs. Multi-year settlements announced earlier in the cycle would make it simpler to plan for change and keep on investing in residents’ priorities.
But reducing grant support for councils who do not put up their taxes is not the right way to provide predictability about funding positions. This will deter councils who want to keep costs to residents down from making the hard choices. Sometimes longstanding services are just not as needed as before. Need evolves, need changes. Other times, new tech means an old service can be delivered more effectively for less money. Local Government may not be known for quick uptake of new solutions, but artificial intelligence will also trickle into the sector, potentially freeing up big capacity in the system. Kensington and Chelsea is already piloting artificial intelligence in some departments, for example Microsoft Copilot as an executive assistant available to specific members and officers. Why bother taking those risks, though, if you are compelled to increase your tax take anyway? Why innovate? Why be different?
And there continues to be fat in the system, as any local councillor will tell you. It is our job, as local councillors, to constantly look for ways to make things worth better. In order to do that, the incentive must be that if you succeed – you can benefit from the hard work you have put in. That is a Conservative value. The Government’s plans to take money away from low tax success stories reverse that incentive. Worse still, in an era with the highest post war tax take, they mean more rates paid by those who can least afford it. Around half of London’s councils are cutting their Council Tax Reduction Schemes this year, meaning more of the worst off will pay more in tax in 2025/26. This is the direction of travel as taxes trend only one way – and Conservatives must fight this, always making the case for lower costs for our constituents and for leaner government.