Hammersmith & Fulham Council has warned that council tax bills in the borough could rise sharply under the Government’s overhaul of council funding, saying the changes could strip away funding equivalent to 40 per cent of its £222 million annual budget.
In a message to residents published on the council’s official website, lbhf.gov.uk, cabinet member for finance and reform Cllr Rowan Ree said the Government’s new “Fair Funding” formula reduces the money Whitehall provides to central London councils and redistributes it to other parts of the country.
“Unfortunately, this change will substantially affect Hammersmith & Fulham,” the statement said.
One of six councils allowed to raise tax significantly
H&F is one of six councils that the Government is allowing to raise council tax significantly to plug the gap. Its neighbours have already sounded the alarm: Wandsworth and Westminster have warned of potential increases of as much as 188 per cent and 200 per cent respectively, according to the H&F statement.
The scale of the potential rises is striking even by recent standards. Wandsworth has proposed a record 94 per cent increase from April 2027, while Westminster has frozen bills for now but warned of a looming £88 million shortfall. The row has already drawn in national politics, with Kemi Badenoch instructing lawyers to explore a legal challenge over the Wandsworth rise.
What is the Fair Funding formula?
The Fair Funding review is the Government’s long-promised reset of how central funding is shared between England’s councils, replacing a system ministers argue is out of date. Under the new formula, money is being shifted away from central London boroughs towards other parts of the country.
Ministers are also aiming to push councils with historically low bills towards the national average. “The Government is aiming to make councils with historically low council tax raise them to the national average. We do not support this,” Cllr Ree said.
That is why inner-London boroughs are in the firing line: boroughs such as Hammersmith & Fulham, Wandsworth and Westminster have kept bills far below the national average for years, and the new formula effectively treats that gap as room to raise taxes rather than a reward for efficiency.
‘Ruthless financial efficiency’
H&F says its low bills are the product of more than a decade of cost-cutting, not generous Whitehall funding. Its “Ruthless Financial Efficiency” programme, launched in 2014, has saved £156 million by modernising services, the council says, helping it deliver the third-lowest council tax in England.
The council points out that its government grant has already been cut by 54 per cent in real terms since 2010, and that official deprivation figures rank the borough as the 120th most deprived of England’s 296 local authorities.
“These outcomes for our residents were not because the previous Government formula was overly generous,” the statement said.
Council challenging the Government
Cllr Ree said she has been working with fellow councillors, officers and the borough’s three MPs to “vigorously challenge the Government to review these measures”, presenting what she described as sound evidence in support of H&F’s case.
But the council accepts the changes are likely to go ahead, and says it is now examining all options to meet its legal duty to set a balanced budget next year and across the Government’s three-year funding settlement — at a time when demand and costs for essential services keep rising.
“The scale of the Government funding reduction over the next four years means our efficiency savings alone will not be enough to close this budget gap,” the statement said.
What happens next
The council says it will soon ask all council taxpayers for their views, promising to work “with residents, not to them” as it seeks to protect the services they value most. Cllr Ree said she was determined H&F would remain “Britain’s best value council”.
The warning lands amid a wider debate about how London is taxed. The Resolution Foundation has estimated that London underpays £3.1 billion a year in property tax under the current system — a finding likely to sharpen arguments on both sides of the Fair Funding row.
