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The history of trans councillors in the UK and Rachael Webb in particular is well documented - e.g. this report from the University of North Carolina, a popular science book, (Searchable online) and more academic publications (Also searchable online). If you have access to newspaper archives online, Webb wrote a letter to The Guardian which was printed on Oct 2, 1990 on p22 and in which she makes multiple references to being trans, and signs off as Councillor Webb. There's also a brief exchange in the Pink News comment thread of the article you linked to between Anwen Muston and Rosalind Mitchell, who was a Labour councillor 1997-1999 who transitioned in office. Unfortunately, erroneous or mistaken reporting of easily disprovable "firsts" is common - claims in 2015 that Emily Brothers was the first trans parliamentary candidate in the UK were debunked within minutes of publication. (She wasn't even the first trans candidate to be selected in that election) ~Excesses~ (talk) 17:54, 14 August 2017 (UTC)[reply]
Rachael Webb probably needs an article in that case, if there's enough materiel to write one. This article now says that Pink News reported Muston as the first transgender woman to be elected to represent Labour, so perhaps another source can counter that statement. Less notable events like this are very difficult to verify pre-1996 or so since less materiel is retained online so you've done well to find that Guardian letter. Sadly can't check it because I don't have access, but perhaps someone else will. This is Paul (talk) 18:10, 14 August 2017 (UTC)[reply]
The risk is ending end up with over half the first paragraph discussing an article that's immediately then dismissed as inaccurate - that seems wildly disproportionate for an article that's already struggling to meet WP:NOTABILITY. Suggestions on the best way of approaching this welcome, but I can't see a way of including the article that makes sense.
Without reading these links, I wonder was Rachael Webb a Labour councillor? There are a number of transgender councillors who predate Muston, such as Jenny Bailey. If she isn't Labour then the article isn't incorrect in naming her as the first elected Labour councillor. If not then obviously they ought to be doing better research. There's also, of course, Nikki Sinclaire, who was the first transgender MEP, even though nobody knew was transgender till she came out. This is Paul (talk) 23:04, 14 August 2017 (UTC)[reply]