Westminster City Council’s plans to charge residents living in the borough’s most expensive homes a premium rate of council tax are intended to start a debate about the future of local government financing, leader Nickie Aiken has said.
Speaking about the proposal at the Conservative Party conference this week, Cllr Aiken (Con) said she hoped to show the government there was an “appetite for this kind of innovative policy”.
She said: “Over the last year I have been interested to see how many wealthy residents have come to me and my colleagues to say ‘can we pay a bit more?’
“There should be a much bigger debate about finance raising and funding at a local level. This is about getting that discussion started.”
Westminster is proposing to ask residents living in properties worth over £10m to pay an additional £1,300 in council tax, effectively doubling their Band H bill. It has asked the government to give it the power to make it compulsory under the Local Government Finance Act 1992 but Cllr Aiken said if that did not happen the council would ask residents for a voluntary contribution.
About a third of the homes targeted are owned by companies or off-shore arrangements. Asked whether these owners would simply find a way to avoid the tax Cllr Aikken said she was hoping to include the payment on the council tax bill, marked as a voluntary contribution, and the people who dealt with their bills would pay it, particularly as it a relatively small amount.
Cllr Aiken rejected a suggestion that any of these owners could fall into the category of ‘asset rich but cash poor’.
“It’s probably what some of them spend on flowers, in a month,” she said.
Cllr Aiken said the council had decided on £10m as the threshold because that is what is referred to as “super-prime” by estate agents and investors. Residents of all Band H properties will be consulted on the additional charge, Cllr Aiken said, and those with properties worth less than £10m would be welcome to contribute.
Westminster has the lowest council tax in the country. Cllr Aiken said the reason the council had decided to take this approach was “to ensure we can freeze council tax for the lower bands, the lower paid and the just about managings”.
She said the plan was to put the money raised, which she hoped would be about £2m our of a maximum of £2.75m, into non-statutory services that would otherwise have to be cut. This could include youth services and a specialist service for gangs.
Cllr Aiken said: “If it fails it fails. Politicians have really got to get braver about trying new policies and starting a debate. We have got to have these grown-up conversations with our public and our voters because these problems [of funding] aren’t going away.”