Smaller council tax rise would leave RBWM in ‘limbo’, say finance chiefs

Residents may refuse to pay council tax if it goes up by 25 per cent but any other scenario would leave the council in ‘limbo’, say Royal Borough finance chiefs.

Councillors scrutinising the draft budgets for 2025/26 at a meeting last week discussed the outcomes of raising council tax in line with the cap – nearly five per cent – or increasing council tax by 20 per cent above the cap.

The ‘ideal scenario’ is the Government agreeing to the full 25 per cent council tax increase says the Royal Borough’s new interim executive director of resources, Ian O’Donnell, with a decision expected by mid-February.

A council tax rise of 25 per cent would grow the budget surplus and build it back ‘to more sustainable levels’ in the medium term.

The latest draft budget report has accounted for the council’s reserves and finance officers estimate these to be £43.878m in deficit.

Therefore a five per cent council tax rise would result in a £32.974million funding shortfall and require £76.848million of Government financial support to ‘balance the books’.

Mr O’Donnell added: “It could be any figure [the Government] might settle upon. What we don’t get through a council tax increase over the cap, we'll have to make up for with [Government financial support].

“We will have to go out and borrow more money and then we have got the cost of that to pay for going forward.”

This, he said, is ‘unsustainable’ and the council may be forced to declare itself unable to meet its liabilities and file a statutory Section 114 notice (effective bankruptcy).

“It is possible we could get a council tax increase of 10 per cent over the cap but we have no guarantee at this point from the Government beyond a one-year agreement,” he added.

“We wouldn’t at that point know what the Government’s going to do in year two of our medium-term financial plan.

“It would leave us in limbo in terms of our long-term financial future but that would be a scenario we have to live with.”

Councillor George Shaw (Lib Dem, Boyn Hill) asked about the ‘contingencies’ if the Government agreement is delayed due to the council’s ‘extremely tight deadlines’ including printing council tax bills.

The finance director said this would have a ‘detrimental impact’ on council tax cash flow.

Before the meeting, Councillor Helen Price (Ind, Clewer and Dedworth East) raised a written question about the Royal Borough’s choice to rely on social media to explain the 25 per cent council tax rise rather than postal leaflets.

“I don’t think this will reach anywhere near all our residents,” she wrote.

“I therefore predict for many residents when the council tax bill lands on their mat they will be shocked and, having made no provision to find the additional monies, will refuse to pay.

“I acknowledge there is an additional discretionary fund to help those who are most financially challenged, but I’m concerned about the large numbers above that limit, who may, as a point of principle, refuse to pay.”

She cited the administrative time and costs involved with issuing fines, sending bailiffs or taking individuals to court, and asked whether ‘sufficient resource’ had been factored into a potential ‘negative impact’ on council tax cash flow.

A council spokesperson responded: “Recognising the impact such an increase will potentially have on our residents, as well as ourselves, a growth bid has been submitted as part of the draft budget for not only additional staff within the revenues team to deal with the administration and recovery of any debt accrued but also an additional financial inclusion officer to work specifically with residents who may struggle to meet the increased demands.

“As now, the most important thing for residents will be to get in touch with us as the Contact Centre advisors will be able to provide advice on help available.”