Local authorities are seeking an unprecedented 25 per cent council tax rise in a desperate bid to avoid bankruptcy. A proposed increase from the Royal Borough of Windsor and Maidenhead would be the largest percentage hike in council tax history.
This would leave residents facing hundreds of pounds in additional annual charges. The Liberal Democrat-led council has been teetering on the edge of issuing a Section 114 notice – effectively declaring bankruptcy – for more than a year.
The local authority has also requested a £60million taxpayer-funded bailout from the Government, warning it will be forced to declare bankruptcy unless the funding is approved.
Under the proposals, residents in an average Band D property would face paying £320 more per year. Band D properties in the Royal Borough currently pay £1,594 annually, having already seen a five per cent rise of £77 last year.
According to the council, it has allocated £2million in its budget to support its most vulnerable residents through the higher charges. Even Windsor Castle would be affected by the increase, with its Band H property potentially facing an £836 annual rise between 2025 and 2026.
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Council tax for some households could shoot up by 25 per cent
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The castle’s council tax is paid through the Sovereign Grant, which is funded by profits from the Crown Estate. John O’Connell, chief executive of the TaxPayers Alliance, condemned the proposed increase as “unprecedented” and warned it would “leave household finances in ruin”.
“Ministers must reassure taxpayers, and send a message to any other councils that have similar ideas, that increases like this will not be tolerated and they should dismiss this request without delay,” he said.
O’Connell described the situation as a “true nightmare before Christmas”, with local residents “staring down the barrel of a devastating council tax rise”. The move has sparked fears that other councils may be emboldened to pursue similar increases if the Labour Government approves the request.
Lynne Jones, deputy leader of the council, blamed historic debt for the proposed tax increase. “Previous administrations cut council tax when every other council was either freezing it or putting on small amounts. We have inherited a financial situation that is just not viable for the council,” she said.
Windsor Castle will not be immune to the council tax hike
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The council’s tax rates are “so low compared to others”, according to Jones. The Berkshire council is struggling with £230million in debts, costing over £18million annually to service. “It’s either this or a Section 114, there is no choice,” Jones added, citing rising costs in social care and housing.
Windsor and Maidenhead council was previously under Conservative control until May 2023, when the Liberal Democrats won the most seats. Local authorities are normally forbidden from raising tax by more than five per cent annually without special ministerial permission.
The proposed 25 per cent rise would be nearly unprecedented, with only Monmouthshire council’s 23 per cent increase between 2000 and 2001 coming close to matching it
Birmingham City Council recently approved a 21 per cent rise over two years amid its own fiscal crisis, driven by an equal pay settlement and a £100million computer software bill.
Conservative councillor Sally Coneron criticised the proposed increase as unrealistic for residents. “According to the current administration there has just been a continuous too low council tax that has caused all these problems. But this is terrible for our residents,” she said.
“25 per cent is just not realistic for people to manage. Keeping tax low and allowing our residents to keep their money is vital,” she added.
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Taxpayers are struggling with the unsustainable burden of council taxPALib Dem council leader Simon Werner defended the move, saying: “While difficult decisions have already been made over the last 18 months, it’s clear that we will need to continue to make tough calls – to fix the mess we inherited.”
Several local authorities across England have already issued Section 114 notices amid ongoing financial difficulties. These include Slough, Thurrock, Birmingham, Croydon and Nottingham councils.
The Windsor and Maidenhead proposal would affect even Windsor Castle, with its council tax potentially rising by £836 annually if approved. The castle’s current Band H council tax payment stands at £3,343, which is funded through the Sovereign Grant from Crown Estate profits.
The unprecedented scale of the proposed increase has raised concerns about other councils potentially following suit if ministerial approval is granted.
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