An eighth London borough is expected to hike council tax well above the national cap as it struggles with a £200 million blackhole in its budget.
Barnet council is in talks with the Government over permission to exceed the 5% limit bills can usually be raised by each year.
To balance the books the local authority would need to increase bills by 32%, or around £500 for the average Band D property, over one or several years.
Barnet has the largest budget gap of any London council, which councillors say is being driven by the surge for costly adults’ and children’s social care and providing temporary accommodation for homeless families.
The Labour-run local authority has the capital’s oldest population, with one in seven residents over the age of 65, and provision for the elderly takes up a third of the town hall’s annual £544 million budget.
To balance the books Barnet would need to increase council bills by 32%
LDRS
For the last two years it has relied on £135 million of emergency loans from the Government to avoid effective bankruptcy.
Simon Radford, Barnet’s cabinet member for financial sustainability, said the council had to “make some very painful decisions in the coming months and years and have a brutally honest conversation with residents”.
“The task is mammoth – we need to find £200 million of savings or cost avoidance within three years,” he added.
“We are doing everything we can, including bearing down on the biggest things that drive the need for statutory services in the first place.
“The reality is, though, that none of the levers in our control can tackle the scale of future demand for these services without national policy intervention.”
It comes after Labour’s Fair Funding Review, which will slash the Central Government grants for the councils with “historically very low” council tax levels in a bid to get the town halls to bring bills more in line with national averages.
It will take the Tory minority-run borough from having the lowest council tax in the country to around average levels.
Lambeth is predicting an almost £130 million blackhole in its budget by 2029/30 due to rising service costs, driven predominantly by increasing demand for temporary accommodation and social care.
Bromley said it will see £30.5 million stripped from its funding in real terms by 2028/29 and it is facing by “far the biggest financial challenge” it has ever seen.
The Government said it has “consulted extensively on reforming the outdated council funding system to ensure money goes where it is most needed, following on from a long-standing consensus”.
It added: "We're also protecting councils through transitional arrangements so no area faces a cliff edge."