Hammersmith and Fulham Could Raise Its Council Tax by 150 Percent. A Government Formula, Not the Council, Opened That Gap.
Estimated reading time: 8 minutes
In short. A Cabinet report going before Hammersmith and Fulham Council on 12 October 2026 sets out three scenarios in which the borough's own share of council tax rises by 100, 125 or 150 percent over two years, taking the Band D charge for that element from £1,009 to as much as £2,522.50 a year [1]. The report says a new government funding formula will cut the council's core grant from £150.5m to £72.4m by 2029/30, a 52 percent reduction, leaving an estimated £160m budget gap [1]. A written ministerial statement from December 2025 confirms this was a deliberate policy choice: the government named six specific low-tax councils, including Hammersmith and Fulham, and chose not to set the usual referendum cap on their council tax for 2027/28 and 2028/29, so as to redirect £250m to higher-need areas [2].
Hammersmith and Fulham has spent a decade telling residents it keeps their council tax low by running a tight ship. Its Cabinet report calls the approach "Ruthless Financial Efficiency", a branded savings programme that it says has delivered £156m since 2014 and helped give the borough the third-lowest council tax in the country [1]. That branding is about to collide with a government funding formula built on the opposite assumption: that councils with low council tax, like Hammersmith and Fulham, are the ones who can most afford to raise it.
The scenario on the table
The document is the General Fund Medium Term Financial Plan 2027/28 to 2030/31, written by the council's Director of Finance for Cabinet's meeting on 12 October 2026 [1]. Currently, a Band D property in the borough pays £1,519.51 a year in total council tax, of which £510.51 goes to the Mayor of London and the Greater London Authority and £1,009.00 is retained by the council itself [1]. The report's Table 7 lays out what happens to that £1,009 under three scenarios for 2027/28, each paired with an expected 5 percent rise in the GLA's own precept [1]:
- A 100 percent increase would take the council's element to £2,018.00, adding £19.40 a week to a Band D bill, and would raise an extra £113.2m by 2030/31, still leaving a £46.1m shortfall.
- A 125 percent increase would take it to £2,270.25, adding £24.25 a week, raising £138.7m and leaving a £20.6m shortfall.
- A 150 percent increase would take it to £2,522.50, adding £29.11 a week, raising £163.9m, which the report says "broadly balances the budget on current assumptions" [1].
Add the GLA's own expected rise and the total Band D bill under the top scenario would reach £3,058.54, an increase of £1,539.03 a year, or £29.60 a week, on what a household pays now [1].
Why the grant is being cut in half
The mechanism behind the gap is a formula change called Fair Funding 2.0, being phased in over three years from 2026/27. The council's own figures show its calculated funding assessment from central government falling from £126.5m in 2026/27 to £100.1m in 2027/28 and £73.5m by 2028/29, as transitional protection is withdrawn [1]. Set against the £150.5m the council received in 2025/26 under the old regime, the report calculates a cumulative drop of £78.1m, or 52 percent, by 2029/30 [1].
Business rates make the same point from a different angle. The council's report shows a gross estimate of £301.3m collectable in the borough for 2026/27, of which, after the statutory three-way split with the GLA and central government, Hammersmith and Fulham's share is £86.3m [1]. But the tariff the council must pay back to government out of that share has more than quadrupled, from £12.8m under the old regime to £53.6m under Fair Funding, leaving the council with £32.7m, a little over a tenth of the gross rates actually collected within its boundaries [1].
The council's own framing of why this is happening to Hammersmith and Fulham specifically is pointed. It says the new relative-needs formula treats the borough as less deprived than others overall, despite "areas of poverty such as the White City and Clem Attlee estates", and that the resources adjustment assumes the council could raise £170m from council tax when it actually collects £92.6m, because its tax base and rates have historically been kept low [1]. The council also notes that government's own deprivation figures rank it the 120th most deprived of England's 296 local authorities, and that its grant had already been cut 54 percent in real terms since 2010, before this latest change [1].
Six councils, one shared design
Hammersmith and Fulham is not an isolated case. The flexibility it has been given over its council tax rate for 2027/28 and 2028/29 was announced in a written ministerial statement by Alison McGovern, Minister of State for Housing, Communities and Local Government, as part of the provisional Local Government Finance Settlement on 17 December 2025 [2]. The statement names six authorities that will not have referendum principles set on their council tax for those two years: the City of London, Hammersmith and Fulham, Kensington and Chelsea, Wandsworth, Westminster, and Windsor and Maidenhead [2].
The government's own reasoning, in its own words, is that these six are "all upper tier, will receive 95 percent income protection and have the lowest council tax levels of any upper tier authority in the country", with Band D taxpayers there paying between £450 and £1,280 less than the national average this year [2]. "By choosing not to subsidise very low bills for the 500,000 households in these places," the statement says, "we will provide £250 million more funding for public services in places with higher need" [2]. It adds that these councils retain other tools unavailable to most authorities, including relatively high reserves, second-homes premium income and lower pension contributions, that they could draw on instead of raising tax [2].
Built into the numbers before any decision is made
What makes the Hammersmith and Fulham report more than a routine list of options is a single sentence buried in its budget strategy section. Paragraph 5.1 states plainly that the flexibility was not really offered as a choice: "it is clear that, having granted H&F flexibility over its council tax rate setting for 2027/28 and 2028/29, the Government expects significantly above normal council tax increases to play a part in addressing this challenge. This assumption is reflected in the Government's estimates of Core Spending Power for the Council for those respective years. Given the scale of the budget gap, it is unrealistic to think that it would be possible to set balanced budgets without doing so" [1].
Core Spending Power is the government's own published estimate of what each council can raise, combining grant and assumed council tax. If Whitehall's Core Spending Power model for Hammersmith and Fulham already assumes a large rise, the borough's headline funding allocation for 2027/28 and 2028/29 has effectively been calculated on the basis that it happens, before Cabinet, or Full Council, has taken any formal decision on a rate.
What Cabinet is and is not deciding on 12 October
The report does not ask Cabinet to set a rate. Its recommendations are to note the revised Medium Term Financial Strategy for 2027/28 to 2030/31, and to agree next steps in developing it, including commissioning an external market research agency to survey residents' views before any figure is settled [1]. The full programme of savings, and the actual council tax decision, is due to go to Cabinet and then Full Council as the 2027/28 Budget Report in "early March 2027" [1]. The 100, 125 and 150 percent figures are scenarios for illustrating the scale of the gap, not a proposal on the table for a vote.
That gap is real regardless of which figure the council eventually chooses. Savings alone cannot close it: the report says so directly, stating that "a budget gap of this magnitude cannot be met by savings alone, and the council tax flexibility that Government has provided will have to play its part" [1]. Between now and March, residents of one of England's traditionally cheapest council tax boroughs are being asked, through a commissioned survey rather than a referendum, to help decide how much of a government-built funding cliff they are willing to pay for directly.
Sources
- London Borough of Hammersmith & Fulham, Cabinet, "General Fund Medium Term Financial Plan 2027/28 - 2030/31", report for the meeting of 12 October 2026, full agenda pack. https://democracy.lbhf.gov.uk/documents/g8052/Public%20reports%20pack%2012th-Oct-2026%2018.30%20Cabinet.pdf?T=10
- Alison McGovern, Minister of State for Housing, Communities and Local Government, "Provisional Local Government Finance Settlement 2026-27", Written Ministerial Statement HCWS1202, 17 December 2025, Hansard, via TheyWorkForYou. https://www.theyworkforyou.com/wms/?id=2025-12-17.hcws1202.h