A local council has warned that it would need to raise its council tax bills by up to 25% to prevent bankruptcy.
The Royal Borough of Windsor and Maidenhead (RBWM) have proposed a 25% hike to its council tax bills as part of its new budget plans for 2025-26. This is over 20% more than the 5% they can legally inrease it without a referendum. This is a rise of 3% plus 1.99% if the council provides adult social care. However, councils are able to request higher hikes in exceptional circumstances.
The local authority – which is run by Liberal Democrat and independent councillors – said the bill would need to increase “significantly” to help cover its monthly costs. Councillors on RBWM’s corporate overview and scrutiny panel will discuss the issue next Monday. Council tax is a bill you pay to your local council and the cost is set by your council and goes towards funding local services such as police and fire services, libraries and educational projects and bill collections.
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The draft budget said: “Without a significant council tax increase above the capped level, aligned more closely with the borough’s neighbouring areas, the council is unable to reach financial sustainability,”
RBWM council is reportedly more than £230million in debt and says it spends £18.6million a year on interest and repayments. According to a report from the Chartered INstitutr of Public Finance and Accountancy (CIPFA) published last year, RBWM was classed as being ‘almost effectively bankrupt” and that declaring bankruptcy through a section 114 notice was a “certainty” without “tough decisions”.
A section 114 notice stops all but essential spending, allowing the council to continue providing services to the most vulnerable residents – but limiting what other valued services it can offer. According to the report, the local authority has faced significant budgetary challenges and “extremely weak” financial resilience over the last several years.
CIPFA also noted that the council had a “historic reserves deficit” for the 2023/24 tax year, which was not apparent until 2024/25. Increased demand and costs in adult social care, children’s social care, special education needs, and temporary accommodation also added pressure to council finances.
Another major impact was the council’s decision to cut council tax bills each year from 2010 and then freeze it for two. This decision was made under a previous administration but continues to have knock-on effects now.
The government may not make a formal decision on the potential 25% hike until the end of February, which is a few days before the council will publish its budget plans. Speaking in December, RBWM’s deputy chief executive Kevin McDaniel said this meant the council was having to draft spending plans without knowing for sure it would have the money to fund them. The final budget will be voted on by all councillors on 5 March.
More and more local councils will be publishing their 2025-26 budget plans over the coming few weeks, with most bills set to rise by a maximum of 4.99%. More councils could request higher increases as budgets continue to be squeezed.
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