West London Borough Maintains Low Tax Stance Amid Funding Squeeze
Hammersmith and Fulham Council, which boasts the third lowest council tax rates in England, has declined to impose a significant increase despite facing substantial reductions in government funding. The Labour-led authority is proposing a balanced revenue budget for the 2026/27 financial year, opting for a standard 4.99 per cent rise in council tax and the social care precept rather than utilizing special permission for larger hikes.
Financial Pressures and Government Reforms
The council anticipates receiving £23.5 million less in grants and retained business rates based on government estimates, primarily due to the implementation of the Fair Funding Review. This nationwide reform, launched last year and being phased in over three years from 2026, aims to redistribute resources more equitably among local authorities. While some councils will benefit, inner London boroughs like Hammersmith and Fulham are experiencing significant financial setbacks.
Council officers have warned that these changes, combined with other economic pressures, mean the authority will "continue to face financial challenges in the years to come." The proposed budget, which will go before various committees before reaching Full Council on February 26, outlines both savings measures and investment priorities for the coming year.
Taxation Strategy and Resident Support
Despite being one of only six councils in England granted permission to increase taxes beyond the standard 4.99 per cent threshold for at least two years, Hammersmith and Fulham has chosen not to exercise this option. The council stated that during a period when residents are grappling with the cost of living crisis, it will "not burden them with extraordinary new tax rises."
The proposed 4.99 per cent increase will see Band D property owners paying an additional 92p per week, generating approximately £4.4 million in extra revenue. This will bring the annual council tax for a Band D home to £1,009 before the Mayor of London's precept is added. The council maintains its Council Tax Support Scheme, with almost 40 per cent of households receiving some form of discount, including:
- Foster carers and care leavers who pay no council tax
- Military veterans who receive a 25 per cent reduction
- Various other support measures for vulnerable residents
Budget Balancing and Future Investments
The council has proposed £9.5 million in savings through a combination of income generation and expenditure reductions, many focused on improving service efficiency. Simultaneously, the budget outlines substantial investments for 2026/27, including:
- Expansion of school breakfast clubs
- Enhanced funding for the Law Enforcement Team (LET)
- Continued support for the flagship free Home Care programme for older and disabled residents
- Various other community-focused initiatives
In his foreword to the budget document, Councillor Rowan Ree, Cabinet Member for Finance and Reform, highlighted that Hammersmith and Fulham has delivered savings exceeding £156 million over the past 13 years. He noted: "The local government sector has seen huge funding reductions since the commencement of austerity, and we have managed this council and residents' interests with care and compassion. But we know that further pressures are coming."
Broader Context and Regional Impact
The Fair Funding Review's impact extends beyond Hammersmith and Fulham, with other inner London boroughs facing similar challenges. Kensington and Chelsea Council expects to lose more than £108 million from its government grant over the next four years, exceeding initial projections of £82 million. Westminster Council is also anticipated to be significantly affected by the funding redistribution.
A Ministry of Housing, Communities and Local Government spokesperson defended the reforms, stating: "Our plans represent a fairer system for all councils, while we continue to protect people from excessive council tax rises." The government maintains that the changes address an outdated system that has left some communities behind, aiming to improve public services through better targeted funding.
As Hammersmith and Fulham Council prepares to finalize its budget later this month, it continues to balance financial responsibility with its commitment to maintaining one of England's lowest council tax rates while protecting essential services for its diverse community.
