London council warns council tax could rise 150% after funding cut

Hammersmith and Fulham council has warned that it may need to raise its council tax element by 150% in 2027-28 to maintain services after a sharp reduction in central government funding. The west London Labour authority says its government funding will fall from £150.5m in 2025-26 to £72.4m over the next four years. A report prepared for the council’s cabinet describes the situation as the “biggest financial challenge in living memory”, according to councillor Rowan Ree, the cabinet member for finance and reform.

Under the 150% scenario, a Band D household would pay £2,522.50 a year for the council’s portion of the bill. Including the Greater London Authority precept, the increase would amount to an additional £29.11 a week. The proposal would broadly balance the budget on current assumptions.

The report also sets out smaller increases. A 100% rise would leave a £46.1m shortfall and increase the Band D charge by £19.40 a week. A 125% rise would leave a £20.6m gap and add £24.25 a week.

The council is among a group of authorities given powers to increase bills above the usual 5% cap next year. The measure follows the government’s “fair funding” review, which ministers say redirects money towards councils with greater needs and weaker council tax-raising capacity. Hammersmith and Fulham argues that it has historically kept bills low through extensive cost-cutting, despite having areas of deprivation.

It says its Upstream London economic strategy has attracted more than £6bn in investment and created 17,200 jobs. Other affected London councils have questioned whether deprivation measures used in the formula accurately reflect need. A spokesperson for the Ministry of Housing, Communities and Local Government said councils decide their tax levels but should put taxpayers first.

The ministry said more than £78bn would be available for local government finances next year, with most of the money unrestricted.