Hammersmith and Fulham council has drawn up stark budget modelling showing council tax could rise by as much as 150% to keep services running, in what the borough’s finance chief describes as the biggest financial challenge in living memory.
A cabinet report due to be published on Monday sets out three scenarios for 2027/28. Under the most severe, a Band D household would pay an extra £29.11 a week — taking the Hammersmith and Fulham element of the bill to £2,522.50 a year — which the report says would broadly balance the budget on current assumptions.
The gentler scenarios still point to steep rises. A 100% increase would add £19.40 a week to a Band D bill, or £2,018 a year, but leave a £46.1m budget shortfall. A 125% rise would cost £24.25 a week extra — £2,270.25 a year — and still leave a £20.6m gap. The figures cover the borough’s share of council tax only and exclude the Greater London Authority precept, currently £510.51 a year, which sits on top of the town hall charge. A Band D household in the borough currently pays £1,519 a year in total.
The warning is the latest escalation in a row that has been rumbling for weeks. The council first flagged the threat last week, when it said the government’s Fair Funding review could strip the equivalent of 40% of its £222m annual budget and confirmed it was one of six councils being allowed to raise bills significantly above the usual 5% cap.
At the heart of the dispute is the Fair Funding review, which redirects cash from central London boroughs to other parts of the country. The borough says its government funding will fall from £150.5m in 2025/26 to £72.4m over the next four years — a cut of more than half — under a formula ministers say will push councils with historically low bills towards the national average.
In the cabinet report, Cllr Rowan Ree, the council’s cabinet member for finance and reform, says the borough is “facing the biggest financial challenge in living memory” under the new funding formula. “Various scenarios in this report show the deep extent that Hammersmith and Fulham council could be required to raise its element of the council tax (which excludes the GLA precept) during 2027/28,” he says.
Hammersmith and Fulham is one of six authorities — alongside Westminster, Kensington and Chelsea, Wandsworth, the City of London, and Windsor and Maidenhead — that have been given powers to raise bills above the 5% referendum cap next year to balance their budgets. The council says neighbouring Wandsworth has warned of potential increases of up to 188%, while Westminster has floated rises of 200%.
In a statement setting out its position, the council says it has been working with fellow councillors, officers and its three local MPs to challenge the government to review the measures — but that the Fair Funding changes are still likely to go ahead. It argues the borough’s low bills are the result of “ruthless” cost cutting rather than generous funding: its Ruthless Financial Efficiency programme has saved £156m since 2014, giving it the third lowest council tax in England, while its grant from government has already been cut by 54% in real terms since 2010.
The council also points to the borough’s pockets of deep deprivation — government figures rank it the 120th most deprived of England’s 296 local authorities — and says its Upstream London growth strategy has attracted more than £6bn of investment and created 17,200 jobs.
Ministers defend the shake-up as a fairer settlement that recognises the needs of “left-behind” areas. A spokesperson for the Ministry of Housing, Communities and Local Government said: “Local authorities decide the level of council tax they wish to set, but we are clear that in doing so they should put taxpayers first.” The department added: “We’ve made over £78bn available for council finances next year, with the majority of money unringfenced so local leaders can decide how best to spend on their local priorities.”
London boroughs hit by the formula argue that flawed deprivation measures risk undermining the government’s aim of making funding follow need. In August, the Conservative leaders of Kensington and Chelsea, Westminster and Wandsworth wrote to Andy Burnham urging a rethink of the proposals.
For residents, the crunch point comes on Monday, when the full cabinet report is published. The council says it will soon ask all council taxpayers for their views as it works to protect the services they value most — but with efficiency savings alone unable to close the gap, some form of significant bill rise now looks all but unavoidable.
