Council tax in Kensington and Chelsea could rise by up to 70% next financial year as the council faces an unprecedented financial challenge.
A significant drop in government funding and rising costs have left the council with a forecast budget gap of £53.9 million for 2027/28. It says the tax rise is being considered as a last resort to balance the budget, alongside £65.3 million of savings identified over the next four years.
Council leaders said the government’s fair funding review is expected to cut the council’s financial resources by more than £100 million in the coming years. That, combined with the rising cost of services such as adult social care and housing, as well as pay awards, has created the gap.
The £53.9 million shortfall is made up of £21.3 million from the impact of funding reform, £18.6 million from budget pressures, £10.7 million from inflation and £5.3 million from pay awards, alongside other financial adjustments.
The council’s own projections show the scale of the problem. Before savings and council tax decisions, the total budget gap for 2027/28 to 2030/31 is projected to be £178 million. The proposed savings would bring that down to £122.6 million.
A 70% council tax rise in 2027/28, followed by 5% a year after that, would bring the gap down to £0 in both 2027/28 and 2028/29. Projections from 2028/29 onwards assume at least 85% of the proposed savings are achieved, and include an annual growth allowance for future pressures.
The council acknowledges that a council tax rise of this size raises affordability concerns for residents. Its Council Tax Reduction Scheme will continue to support vulnerable households, and eligible claimants will receive the same percentage reduction in their council tax bill.
Residents can have their say in a public consultation running from now until 6 January 2027. Final budget recommendations will then be considered in March 2027.
Council tax rises alone are not enough to bridge the gap. Despite previous efficiency savings and cuts, the council still needs to find further savings.
Of the £65.3 million in proposed savings, £23.7 million would be made in 2027/28. However, almost half, £29.7 million, sits within council-wide transformation programmes and has not yet been allocated to individual service budgets. The next phase of work will focus on drawing up detailed business cases and confirming that these savings can actually be delivered.
The council’s K&C 2030 transformation programme needs £13.2 million of investment and is expected to deliver more than £34 million in savings and efficiencies. These would come from improved productivity, redesigning the organisation, better use of assets and contracts, and more digital automation.
The council is also investing in digital transformation and cyber resilience following a cyber-attack. This includes £19.1 million of one-off investment and £2.4 million in recurring costs.
The council has said all residents, business and voluntary and community organisations will have an opportunity to review and comment on the budget proposals. Details of will be published on the council’s website but specific channels of engagement are set to include sessions with residents, promotion via social media and direct engagement with voluntary and community organisations known to the council.
