Wandsworth Council has been left with an unexpected £500k hole in its budget after Secretary of State Eric Pickles refused to pay a council tax freeze grant to the authority.
The council raised the borough’s council tax by more than 3 per cent last April, but gambled on using a loophole to qualify for the Government’s council tax freeze grant - worth £492,000, offered for those who agreed to keep any council tax rise below 2 per cent.
It has now emerged that Mr Pickles’ Department of Communities and Local Government (DCLG) has refused to pay the grant, leaving council bosses red-faced.
For almost a decade the council had prided itself at having the country's lowest Band D rate, however last March the local authority revealed it was increasing the tax by 22p a week to £685.77, an increase of 3.1 per cent.
The council explained the hike by saying it had frozen its share of council tax, but admitted overall bills rose slightly because of increasing charges from other public sector organisations, including the Western Riverside Waste Authority, whose funding makes up part of the bill.
The move allowed Westminster Council to pinch the accolade of lowest cuncil tax when it unveiled its new Band D tax rate of £680.74.
Councillor Rex Osborn, Wandsworth Labour Group leader, said: "It’s bad enough that the Tories chose to make Wandsworth one of the only councils in the country to raise council tax last year - at a time when residents could least afford it.
"Wandsworth’s Tories have gambled with taxpayers’ money and lost almost half a million pounds."
Last month Wandsworth's Labour councillor's launched an independent commission of local authority finance experts to come up with some sensible ways to protect frontline services and keep council tax low.
Coun Osborn added: "In this climate, we need a steady hand overseeing the coffers in Wandsworth, not a party who takes gambles with taxpayers’ money."
Before Christmas, Mr Pickles said he hoped to take action against "democracy dodgers" councils that have repeatedly breached the two per cent threshold rather than hold a binding referendum on an increase above that figure.
Councillor Guy Senior, cabinet member for finance and corporate resources, said: "When we set out the council tax level last year we hoped to get the refund back but the regulations were changed last year so we didn't.
"The money will have to come from other councils budgets."
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