Hounslow Council Goes for Maximum Tax Rise as Deficit Grows


Budget report gives grim warning of further pain to come


Residents will be seeing a 4.99% increase in their council tax bills from April

February 4, 2025

Hounslow Council looks certain to confirm that council tax in the borough will be increased by the maximum amount allowed for the next financial year.

A budget report due to be presented to the borough cabinet next Tuesday sets out the reasons for a significant shortfall in its finances which has required cost cutting measures, fee increases and a drawdown of reserves to bring it into the legally required balance.

The report warns that the financial pressures, which are mainly driven by the increased demand for social care as well as inflation, are not likely to abate in the coming year and therefore more cuts and tax rises should be anticipated. The council also blames reductions in central government funding for the deficit.

The council faces a budget gap of £28.3 million for 2025/26, which is projected to increase to £35.7 million by 2027/28. This has required a 4.99% increase in tax to be recommended 2% of which is the social care precept. The rise is the maximum allowed without holding a referendum. Residents will start paying the higher rate in April.

A £4million saving is anticipated from adjustments to the Local Council Tax Support scheme reducing costs from £19 million to £15 million. The council also plans to increase most service charges in 2025/26 to ensure full cost recovery for service delivery and council rents are increasing by 2.7% the maximum allowed.

Earlier, the One Hounslow Financial Strategy (OHFS) had outlined measures to address the budget shortfall, including efficiency improvements, service delivery transformations, and potential revenue generation opportunities. These are anticipated to bring a net reduction of £12million in the shortfall which, combined with the tax rise, which raises £7.1 million, still leaves £14 million needing to be covered by reserves. Anticipating a similar gap in the following year an equivalent amount of the council’s reserves has been designated as risk reserve.

The report states, “Outside of this crisis, the Chief Financial Officer would be advising against the use of reserves to fund underlying recurrent budgets, however it is considered necessary for the 2025/26 budget to do this while the council continues to adjust to the changed business environment and is then able to return to the path towards financial sustainability.”

Hounslow Council Tax Bands 2025/26

Valuation Band

Banding Factor

Hounslow Council Tax (£)

GLA Precept (£)

Total Council Tax (£)

A

6/9

1,063.63

326.92

1,390.55

B

7/9

1,240.90

381.41

1,622.31

C

8/9

1,418.17

435.89

1,854.06

D

9/9

1,595.44

490.38

2,085.82

E

11/9

1,949.98

599.35

2,549.33

F

13/9

2,304.52

708.33

3,012.85

G

15/9

2,659.07

817.30

3,476.37

H

18/9

3,190.88

980.76

4,171.64

There has already been push back on some of the recommendations in the OHFS including savings from dimming streetlights and changes in the way that tree maintenance and replacement is handled. Other measures likely to prove unpopular are rises in charges for use of leisure centres and an increase in the level of Fixed Penalty Notices issued by the council to the maximum allowed.

Concern is raised in the budget report that assumptions in the OHFS on inflation and interest rates may prove optimistic with the council’s borrowing costs rising sharply in January. Global expectations on inflation and interest rates are now less favourable than when the strategy was drawn up and Donald Trump’s use of tariffs is expected to increase prices. This could undermine the council’s intention to rebuild reserves ahead of the 2027/28 financial year.

The Conservative opposition has raised concerns that the full extent of the council’s budget shortfall is hidden in the accounts of the Lampton group of companies, which are entities wholly owned by the council. Tory councillors say there is a lack of transparency regarding these companies and full disclosure would reveal mismanagement.

Cllr Shantanu Rajawat, the Leader of Hounslow Council, said, “We must continue to keep an iron grip on our finances to protect Hounslow’s future and to ensure long-term growth. Years of chronic underfunding by the previous government, spiralling costs and increasing demand have left many councils in a very dangerous place, and while we are not one of those, we have little choice but to reduce our spending.”

Cllr Peter Thompson, leader of the Conservative Group, said, “Hounslow Labour’s budget is going to be painful for all of us, and most of that pain was largely avoidable. The council faces a multi-million-pound financial black hole, in part due to the massive increase in National Insurance tax, but primarily due to their mismanagement of the Lampton Group, a company wholly owned by the borough that made a £12 million loss in the last financial year due to the council’s mismanagement. As residents, we all now have to pay the cost of bailing out this failing company with higher council tax, dimmer streetlights, hikes in social rents and millions of pounds of cuts to just about every council department. It didn’t have to be this way, but we’re all now facing the consequences of Labour’s financial mismanagement of our borough.”

Assuming the budget is approved at the cabinet meeting, it will then be put to a vote at a full council meeting taking place on Tuesday 25 February.

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