H&F Council Officers Warn of 'Financial Challenges Ahead'
Reductions in grants and business rates changes have cost borough £23.5million
Council tax bills to rise by 4.99% in April
February 4, 2026
Hammersmith & Fulham Council is proposing the maximum allowed council tax increase from this April despite what it says is a significant hit to its funding due to government reforms.
The borough has revealed it is expecting to receive £23.5 million less in grants and retained business rates based on a Government estimate, due to a recent review of local authority funding. The council has put forward a range of areas in which it is looking to boost income and cut expenditure, such as by hiking its share of tax and the social care precept by a combined 4.99 per cent – the standard maximum amount allowed for local authorities.
Officers have, however, warned the changes alongside other pressures mean it will “continue to face financial challenges in the years to come”.
The proposed budget, which is in the midst of going before various committees before it is presented to Cabinet and ultimately Full Council on 26 February, lays out the council’s spending priorities for the year ahead.
Hammersmith and Fulham council tax rates was the third lowest in the country for 2025/26. was also hailed as “very ambitious and financially well-run” in a review by local authority peers published last summer.
Almost four in ten households receive a form of discount under the Council Tax Discount scheme. These include foster carers and care leavers, who pay no council tax at all, to military veterans, who get a 25 per cent cut.
For 2026/27, the council’s proposed hike of tax and the social care precept by 4.99 per cent will bring in a further £4.4m. This would take the annual rate for a Band D home to £1,009 before the Mayor of London’s precept is added.
Hammersmith and Fulham Council was one of six in England granted permission to increase taxes by more than 4.99 per cent for at least the next two years. The local authority previously said in response to the exception that at a time when residents are struggling with the cost of living it will “not burden them with extraordinary new tax rises”.
Total ‘savings’, a mixture of income and cuts, of £9.5m are proposed, many of which relate to improving the efficiency of various services.
A lengthy list of planned investments for 2026/27 are similarly detailed, from school breakfast clubs to the council’s Law Enforcement Team (LET) and flagship free Home Care programme for older and disabled residents.
The paper, to go before Cabinet on 9 February, also outlines the pressures the local authority is facing in the short and medium term.
In his foreword, Cllr Rowan Ree, Cabinet Member for Finance and Reform, outlines how Hammersmith and Fulham has delivered savings of more than £156m over the last 13 years.
He wrote, “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.
“Changing demographics and a weak national economy will mean demand for council services will continue to rise. The so-called Fair Funding changes, which have been anticipated for over a decade, are now being implemented in 2026/27, with only a year’s notice. This will reduce our central government funding over the medium term, and redistribute more of the Business Rates income this borough generates to other parts of the country. Furthermore, investment will always be needed to ensure that the services we provide continue to be as effective as they can be.”
The Fair Funding Review was launched by the Government last year with the changes, to be phased in over three years from 2026, intended to better direct resources to the councils in the most need.
While some local authorities will see large increases in their funding, others, such as Hammersmith and Fulham, were always expected to fare worse.
The Local Democracy Reporting Service (LDRS) revealed how on an internal call last summer staff at Hammersmith and Fulham were told a budget gap of £34m was expected for 2026/27, partly due to the planned changes.
While commending the Government’s decision to move from a one-year to a multi-year financial deal, the Cabinet paper outlines how the estimated income from grants and retained business rates is £133.4m for 2026/27, against £156.9m for 2025/26.
This is set against a rise in council tax and relief funding from the Government, resulting in an overall reduction in ‘Core Spending Power’ of £11.3m.
A Ministry of Housing, Communities and Local Government (MHCLG) spokesperson previously said the Government via the Fair Funding Review is “reforming an outdated system which has left communities behind, ensuring we can better fund councils and improve public services”.
They added, “Our plans represent a fairer system for all councils, while we continue to protect people from excessive council tax rises.”
Other Inner London councils, such as Westminster and Kensington and Chelsea, are also set to be hard-hit by the Government’s changes following the Fair Funding Review.
Kensington and Chelsea has said it is set to lose more than £108m from its Government grant over the next four years, more than the £82m it was initially expecting.
Ben Lynch - Local Democracy Reporter