Tory and Lib Dem-run authorities face deep funding cuts while Labour strongholds enjoy £1.6bn increase
Daily Telegraph 16/10/26
Andy Burnham’s government has been accused of waging a £500m “class war” on councils.
Conservatives and Liberal Democrats say ministers are deliberately cutting funding from affluent rural councils to bankroll urban Labour Party strongholds.
An analysis by The Telegraph shows that Tory and Lib Dem-dominated councils in England will receive a £487m cut in government-controlled grants and funding during this parliament.
Labour councils, by contrast, will enjoy a £1.6bn funding increase.
The cuts are so deep that some town halls have warned they would be forced to impose dramatic increases in council tax to make up the shortfall.
Councillors have said that their ability to fix potholes, collect bins and build new infrastructure are “under threat” as a result of the funding cuts.
Kemi Badenoch said she was prepared to challenge the cuts in court, saying ministers were “taking money from areas that don’t vote Labour and giving it to places that do vote Labour”.
On Friday, she said: “Labour’s spiteful class war continues – they just can’t help themselves.
“Councils that balance their books and spend taxpayers’ money responsibly are being punished because the politics of envy runs so deep within Labour. If councils like bankrupt Birmingham and Nottingham managed their finances properly, Labour wouldn’t need to raid everyone else’s coffers.
“A Labour government taking money away from Conservative-run councils to hand it to their own is like financial gerrymandering. And it’s ordinary people who will pay the price in higher council tax and worse services, through no fault of their own.”
However, Angela Rayner’s communities department, which pushed through the reforms, insisted the changes were needed to rebalance funding towards areas with higher deprivation, so that it was “truly based on need”.
Shortly before he became Prime Minister, Mr Burnham suggested that large parts of the country were being left behind compared with London, and pledged to deliver “good growth in every postcode”.
He said: “The whole country suffers when the regions and nations are not meeting their potential and Londoners are left with an overheated economy and overcrowded housing market ... we will never get growth up to the level Britain needs unless every single postcode ... is set up to contribute to it.”
Councillors told The Telegraph they were “looking down the barrel of a gun” and accused ministers of “choosing to force councils into a form of bankruptcy”.
‘Deeply political’
Robert Morritt, the leader of Wandsworth council, accused Ms Rayner of “punishing Conservative councils like ours for having low tax, while rewarding a lot of Labour councils who don’t”.
He said: “It’s deeply political. It’s not fair. Wandsworth shouldn’t be a target in Labour’s class war. Our residents already make a huge contribution each year to the Treasury’s coffers.”
House of Commons data analysed by The Telegraph show that councils where Conservatives hold the most seats will see their central government-controlled funding reduced by 6.5 per cent from £4.4bn in 2025-26 to £4.1bn in 2028-29.
Lib Dem councils will experience a cut of 5.2 per cent from £3.9bn to £3.7bn over the same period.
In contrast, Labour councils will see the amount of money they receive increase by 14.6 per cent from £10.8bn to £12.3bn, a £1.6bn cash injection.
Labour-run Birmingham, which declared effective bankruptcy in 2023 and was accused of “financial mismanagement” by Rishi Sunak, who was prime minister at the time, would receive the biggest nominal funding boost of any council in the country. Its budget will increase by £404m.
In total, 76 per cent of Conservative councils will face nominal cuts, compared with 78 per cent of Lib Dem councils and just 33 per cent of those led by Labour. Tory and Lib Dem councils warned that funding cuts had left them with little choice but to make substantial increases to council tax.
Last month, Wandsworth council said it would put up charges by 94 per cent from April, increasing the average band D tax bill in the London borough by £958.
The council, which has one of the lowest tax rates in the country, blamed Labour government cuts to its grant funding of as much as 40 per cent.
Mrs Badenoch blamed the Government’s “outrageous” cut to Wandsworth’s funding budget for the decision, adding that councillors were not “doing it because they wanted to”.
She said: “What it looks like Labour is doing is taking money from areas that don’t vote Labour and giving it to places that do vote Labour.”
Wandsworth, which has historically had some of the lowest council tax rates in the country, will receive £84m a year less from Whitehall by the end of the decade.
The Prime Minister has made the goal of achieving “good growth in every postcode” a central part of his devolution agenda to decentralise fiscal decision-making away from Whitehall.
Steve Broadbent, the leader of Buckinghamshire council, said: “Apparently the Prime Minister wants growth in every postcode, just not those where he’s not in control.”
The local authorities worst affected by the funding cuts are Lib Dem-led Windsor and Maidenhead, which will see its budget fall by 86 per cent from £36.2m to £4.9m, and Conservative-led Surrey, where government grants will be cut by 63 per cent from £292.2m to £108.3m.
Other heavily affected councils include Lib Dem-run Wokingham, which is to lose £22m (60.5 per cent), Richmond and Chelsea, which will have £29.5m (54.6 per cent) cut from its budget and Kensington and Chelsea, which will be £61.3m (47 per cent) worse off.
Elizabeth Campbell, the Tory leader of Kensington and Chelsea council, said: “We are looking down the barrel of a gun. The cuts are so enormous that they almost affect our very existence as a council.”
Ms Campbell said community spaces in the local authority would need to be scrapped after its budget was cut by £127m over four years.
The council, which was ranked the most productive in England last year, has scrambled to find £21m in savings, but she warned that the roughly £100m shortfall could not be made up just in savings. As a result, services that beautify the area, such as an Ecology Centre in Holland Park, are likely to be cut.
She said: “Children really enjoy going, they learn about biodiversity, but that is probably going to have to go.”
Public parks in the borough are likely to be planted less often and have fewer gardeners to scale back costs. She said: “It’s a case of looking at everything and seeing how we cut costs around it.”
West Berkshire council has gone from retaining 30 per cent to 17 per cent of business rate receipts and has also had its government grants cut by £4.5m, leaving it facing a shortfall of £22m.
Jeff Brooks, the council’s Lib Dem leader, said its ability to fix roads, build new infrastructure projects and maintain cultural centres such as swimming pools and sports centres were “all at risk” as a result of government cuts.
He said: “We now wouldn’t really be interested in helping businesses to our area because they bring the infrastructure demands but not the money – how is that helping economic development?”
Tonbridge and Malling council and Wandsworth council, which are both run by the Conservatives, have each scrapped or postponed social housing projects, because central government cuts mean they no longer have the capital needed to invest.
Matt Boughton, the leader of Tonbridge and Malling council, which has “indefinitely” suspended building 300 social houses, said: “We have been punished because we managed our finances well.”
Gareth Roberts, the Tory leader of Richmond council, said: “The Government is choosing to force councils into a form of bankruptcy,” warning that a plan to save £39m a year still will not come close to covering the shortfall.
He added: “If the Government’s plans go ahead as they are without any change, London councils are predicting half of London’s councils will go into extreme financial support by 2028. We could well be among them.”
For the analysis, The Telegraph looked at “core spending power” across all local authorities in England between 2025-26 and 2028-29, minus council tax spending, which is raised and spent locally. The remaining money, which includes government grants and business rates, is funding effectively controlled by the national government.
In each case, we looked at the largest party in each council, which may not be the party that controls the council, especially where there are coalitions.
A Ministry of Housing, Local Government and Communities spokesman said: “We’re fixing an outdated funding system so funding goes where need is greatest. As a result, nine in 10 councils will receive funding that broadly matches their need, up from only a third before our reforms, so they can deliver the high-quality public services local people need.
“This is alongside making over £78bn available for council finances this year, with the majority of money un-ringfenced, so local leaders can decide for themselves how best to spend on their priorities.”
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