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Westminster seeks law change to focus tax rises on the wealthiest

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Westminster City Council is urging the government to give it the freedom to impose higher council tax increases on the most valuable housing.

In an LGC interview, Westminster chief executive Stuart Love said the council’s approach to the Ministry of Housing, Communities & Local Government’s fair funding review was not “going to the government with a begging bowl – it’s about saying we’d like further freedoms and flexibilities to be able to better manage our finances”.

Mr Love was interviewed by LGC at a time much of local government has claimed the current distribution system favours central London authorities such as Westminster, which has a 2018-19 band D council tax of just £711, including Greater London Authority precept – far lower than for most councils with poorer populations.

Citing pressures on Westminster such as homelessness, the costs of major events such as marches and anti-terrorism preparations, Mr Love said: “We don’t think it’s particularly fair not to recognise that we have all these additional responsibilities.”

Mr Love said his council was putting together a “package” of demands for greater financial freedom. While it did not seek to create extra council tax bands covering higher value homes, it sought for the law to be changed to allow it to “levy a greater increase to the higher bands”.

Although he did not disclose the level of intended increase, he said it would “certainly not [be] hundreds of percent”.

He said the voluntary contribution scheme in which wealthy residents were this year encouraged to pay a higher level of council tax raised £0.5m, despite a lack of publicity due to it taking place in the purdah period. This indicted wealthier residents were, he said, “quite happy to pay a bit more because they wanted a council that cares for the most vulnerable people in society and they were happy to contribute”.

While Mr Love said Westminster had faced “enormous reductions” in funding as a result of austerity, its “incredibly strong financial management and stewardship” meant that its “revenue budgets this year and next are fine”.

He added: “It will get very tough for us again from 2020-21 and beyond when we know we face further reductions in our revenue budgets.”

However, Mr Love said he was keen to project that the council was “very confident” in its finances.

“It’s also hugely important that our staff understand that we are a good, sustainable organisation, we will be here for a very long time, people have the opportunity to grow their careers in Westminster,” he said. “We have to give people hope and we have the ability to do that.”

Mr Love said he had “heard the arguments” made by councils in other areas, including outer London, that Westminster was over-funded but said his council generated more gross value added than any other area.

“In terms of the country’s economy, it’s critically important that we have the ability to… support the economy and facilitate its growth,” he said. “That economic impact is obviously a national impact, not just in Westminster.”

Mr Love said Westminster kept just 8p in the pound of the business rates it collected. He expressed concern about the “challenges that online shopping presents to the likes of Oxford Street and others”, calling for online firms to “pay a business rates equivalent in the same way that those with premises do” to “even out the playing field”.

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