London council leaders have written to Andy Burnham, accusing the Government of “devolving blame” for the huge council tax hikes facing some in the capital.

The leaders of Conservative-run Westminster, Wandsworth and Kensington and Chelsea town halls argue they are being forced to significantly increase bills or slash services to plug the massive budget holes left by cuts to central government funding.

Under Labour's “Fairer Funding Review”, the three local authorities along with Hammersmith and Fulham, the City of London and Windsor and Maidenhead will see large cuts to funding settlements.

Westminster leaders have already warned that council tax will need to rise by up to 200% unless there are significant cuts to services, while Wandsworth is understood to be plotting a 160% increase in bills.

Council tax rises are usually set at a maximum of 5%, but the boroughs have been given special permission to hike bills far beyond this to make up shortfalls.

Westminster council’s Paul Swaddle, Wandsworth’s Robert Morritt and Kensington and Chelsea’s Elizabeth Campbell said the Government’s funding formula “punishes low tax councils”.

“If our councils do not impose council tax rises, our communities face considerable cuts in funding for local services,” the Tory town hall leaders said.

“This is not just devolving blame, it is devolving council tax rises and government cuts.

“This is fiddled funding, cooked up in Whitehall but leaving town halls to carry the blame.

“These tax rises are in addition to the new top-up council tax on many homes in our councils – and none of the revenues from this tax penalty will be retained by councils or by the Mayor of London.

“There is nothing local about it.”

Struggling local authorities have previously asked the Government for special permission to hike bills above 5%, with the record being set by Croydon council in 2023 when council tax was increased by 15%. Slough residents saw their payments rise by 10% the same year.

Last year Worcestershire council was given special permission to hike bills by 9% following funding shortfalls. The year before Newham increased payments by 8%.

The town halls that face imposing huge hikes next April argued that the Ministry of Housing, Communities and Local Government “assumed massive rises in council tax” in their areas to compensate for cuts to central government funding when publishing its Local Government Finance Settlement.

“It’s clearly not a local decision if the tax rises have already been baked into the finances by the Government,” they said.

Shadow local government secretary Sir James Cleverly said Londoners are facing a “Burnham penalty on their council tax”.

The Tories are calling for Local Government Secretary Angela Rayner to urgently review the funding changes that they say are “set to worsen the lives of local residents across London and the South East”.

But a Government spokesperson argued that minister are “fixing an outdated funding system” whereby some of the wealthiest parts of the country “benefitted from exceptionally high levels of government support, while communities facing greater pressures lost out”.

They added that the reforms make the system “fairer for taxpayers across the country”.

The letter comes just weeks after the Prime Minister announced that English mayors will be allowed to keep a share of the taxes collected in their area.

Mr Burnham said allowing mayors to keep a share of income tax and business rates will help to promote growth “in every postcode”.

The council leaders of Westminster, Wandsworth and Kensington & Chelsea claim that “the reverse is happening here”.