Government gives RBWM 'flexibility' to raise council tax above the cap for 2026/27

The Government has said it is giving the Royal Borough ‘flexibility’ to increase council tax by 7.5 per cent for the 2026/27 financial year – but the council’s lead member for finance has warned the authority is still facing a ‘perfect storm’.

Council tax rises are set at a 4.99 per cent threshold nationally.

The cap can be increased further if the Government gives local authorities permission or if the rise is approved through a referendum.

In 2025/26, the cash-strapped council was allowed to increase its council tax above the threshold by 8.99 per cent.

In December, the Government published a provisional settlement, which proposed that six local authorities, including the Royal Borough, will be allowed to increase council tax above 4.99 per cent without a referendum in 2027/28 and 2028/29 as well.

The six authorities also included wealthy London boroughs and were selected because they ‘have the lowest council tax levels of any upper tier authorities in England’.

Details on the 2026/27 settlement were confirmed yesterday (Monday).

Local Government Minister Alison McGovern said in a Parliamentary statement that Windsor and Maidenhead, along with six other councils, will receive ‘additional flexibility’ to increase council tax above the usual threshold.

Other councils granted these higher increases include Bournemouth, Christchurch and Poole (6.75 per cent), Warrington (7.5 per cent), Trafford (7.5 per cent), Worcestershire (9 per cent), Shropshire (9 per cent), and North Somerset (9 per cent).

But Ms McGovern said this flexibility should be treated as ‘a limit not a target’ for councils that ‘remain in a challenging financial position’.

“Fairness for taxpayers is at the heart of this Government’s decision making,” she said.

“Our local Government finance reforms get money to where it is needed, but we recognise that some councils remain in a challenging financial position as they continue to deal with the legacy of the previous system.”

Ms McGovern added: “These are difficult decisions that are not taken lightly. In line with the approach taken last year, we have not agreed to any requests that could lead to households in those areas paying above the average council tax level.”

The council’s draft budget for 2026/27 states that the council will have a £50million shortfall in funding and the authority will require a capitalisation direction from the Government – otherwise known as Exceptional Financial Support (EFS).

Budget papers showed this £50million gap will increase to £112million by 2030/31, if council tax rises were kept at the usual 4.99 per cent threshold.

The Royal Borough has been further hit by the Government’s proposed changes to the Fair Funding Review 2.0, meant to direct higher funding to local authorities in deprived areas. 

For the Royal Borough, this calculation is estimated to lead to a loss of over £6million of grant funding reduction in 2026/27, rising to around a £29million shortfall by 2030, according to the report.

One scenario that has been modelled in the 2026/27 draft budget showed that increasing council tax every year across a three-year period to bring it ‘in line’ with the national average would help the council address financial pressures.

But the papers said that even if this scenario played out, the council would still need Exceptional Financial Support from the Government, and the budget gap could still grow to more than £60million by 2030/31.

Speaking to the Local Democracy Reporting Service (LDRS), the council’s cabinet member for finance, Lynne Jones, said this was ‘the perfect storm’.

Councillor Jones (Ind, Old Windsor) said: “[The] Government has severely reduced our funding, it’s absolutely torn apart our plan for financial stability.

“It’s just not fair to residents, it really isn’t. Our 7.5 [per cent increase] is pretty much the equivalent of Reading’s 4.99 [per cent].

“We’re so far behind in council tax – it’s a perfect storm really. The Conservatives left us with a £30million negative reserves, council tax two thirds of anybody else’s and now the Labour Government has just taken away £30million of funding.”