London Council Warns of 150% Council Tax Rise

Published: 03 October 2026. The English Chronicle Desk. The English Chronicle Online

A Labour-run council in west London has warned that residents could face a dramatic increase in council tax as the authority struggles to balance its finances following a major reduction in central government funding. Hammersmith and Fulham council has described the situation as its biggest financial challenge in living memory, with senior councillors examining scenarios that could require the council’s own portion of council tax to rise by as much as 150% in the 2027/28 financial year.

The potential increase would represent a significant change for households in the borough, where residents have historically benefited from relatively low council tax compared with many other parts of the country. Under the most severe scenario examined by the council, a Band D household would see the authority’s council tax element rise to £2,522.50 a year. Including the existing Greater London Authority precept, the overall bill would be higher.

The council has estimated that a 150% increase in its own council tax element would broadly balance its budget under current financial assumptions. For a Band D household, the increase would amount to approximately £29.11 a week. The figure does not represent a 150% increase in the entire council tax bill because the proposed rise applies specifically to Hammersmith and Fulham’s portion rather than the separate charge collected for the Greater London Authority.

The warning comes as local authorities across England continue to face intense financial pressures. Councils are responsible for funding and delivering a wide range of essential services, including social care, housing support, environmental services and other local responsibilities. When government grants are reduced, authorities have limited options for closing funding gaps, including increasing local taxation, reducing spending, finding efficiencies or using reserves where available.

Hammersmith and Fulham says its financial position has been sharply affected by changes to the way central government funding is distributed. The authority received £150.5 million in government funding during the 2025/26 financial year, but under the new funding arrangements that amount is expected to fall by more than half, reaching £72.4 million over the following four years.

The scale of the reduction has prompted the council to consider several possible council tax scenarios. Under one option, the council’s own portion of council tax would rise by 100%, producing a Band D charge of £2,018 a year. Even with that increase, the council estimates it would still face a £46.1 million budget shortfall. The corresponding increase for a Band D household would be around £19.40 a week.

A second scenario involves a 125% rise in the council’s own portion of the tax. Under that calculation, the Band D charge would reach £2,270.25 annually, while the authority would still face an estimated £20.6 million gap. The weekly increase for a Band D household would be approximately £24.25.

The most substantial option examined is a 150% increase. That would bring the council’s Band D element to £2,522.50 annually and, based on current assumptions, would broadly close the projected budget gap. The estimated additional cost to a Band D household would be £29.11 a week.

The proposals are particularly significant because the council has historically maintained comparatively low council tax levels. The authority argues that its lower bills were achieved through sustained efforts to control spending and improve efficiency, rather than because it does not face significant social and economic pressures.

Hammersmith and Fulham contains areas of substantial deprivation alongside some of London’s wealthier neighbourhoods. Council representatives have argued that the borough’s financial position cannot be assessed simply by looking at average household wealth or property values. They say local needs and the ability of residents to absorb higher bills vary considerably across the borough.

The dispute is closely connected to the government’s revised approach to local authority funding. The new system was designed to redirect resources towards councils considered to have greater needs and weaker abilities to raise money through council tax. Ministers have argued that authorities with historically low council tax levels should bring their revenues closer to national averages where necessary as central government support is reduced.

Under the new arrangements, Hammersmith and Fulham is among a group of London authorities that have been given greater flexibility to raise council tax above the normal 5% threshold next year. Westminster, Kensington and Chelsea, Wandsworth, the City of London, and Windsor and Maidenhead are also included among councils granted additional powers as they attempt to manage their budgets.

The existing council tax position illustrates why the proposed change could have such a visible impact. A Band D household in Hammersmith and Fulham currently pays around £1,519 a year, a figure that includes the Greater London Authority precept. The GLA portion, which supports services and responsibilities across the capital, is separate from the council’s own tax element.

Hammersmith and Fulham’s Labour administration has defended its previous approach to local finances, saying it deliberately kept council tax comparatively low while pursuing aggressive cost reductions. The council has also pointed to its economic development programme, Upstream London, as evidence of efforts to strengthen the local economy. According to the authority, the programme has helped attract more than £6 billion in investment and contributed to the creation of around 17,200 jobs.

However, the government’s revised funding formula has raised concerns among several London councils. Authorities affected by the changes have questioned whether the measures used to determine deprivation and local need accurately reflect conditions in London. They argue that shortcomings in those calculations could result in funding being moved away from areas that still face substantial demand for public services.

The disagreement has also crossed political lines. Conservative leaders of Kensington and Chelsea, Westminster and Wandsworth councils wrote to Greater Manchester mayor Andy Burnham in August urging reconsideration of aspects of the proposals. Their intervention reflected wider concerns among affected London authorities about the financial consequences of the new funding system.

For residents, the possibility of a substantial increase raises questions about household finances and the future level of local services. Council tax is paid by households according to property bands, meaning the precise financial effect varies between homes. Any eventual decision would also depend on the council’s final budget calculations, the funding it receives and the measures it can take to reduce the projected deficit.

The council has stressed that the figures currently under consideration are scenarios rather than a final decision. Financial forecasts can change as government funding arrangements, local income, spending requirements and economic conditions develop. The eventual tax increase, if any, will therefore depend on the authority’s final budget position.

The government, meanwhile, has emphasised that councils retain responsibility for determining their own council tax rates. A spokesperson for the Ministry of Housing, Communities and Local Government said local authorities should put taxpayers first when deciding the level of council tax they set. The government also said it had made more than £78 billion available for council finances for the following year, with most of that funding not ring-fenced so local leaders can determine how it is spent according to local priorities.

The contrasting positions underline a broader debate over how local public services should be financed. Councils argue that reductions in central funding can leave them facing difficult choices between increasing charges and reducing services, while central government maintains that local authorities have greater flexibility to determine how available resources are allocated.

For Hammersmith and Fulham residents, the immediate focus will now be on how the council’s financial position develops before the 2027/28 budget is finalised. A 150% increase remains a scenario under consideration rather than a confirmed tax rise, but the scale of the figure illustrates the financial pressure confronting the authority.

The debate also highlights the increasingly difficult balance facing local government: maintaining essential services, protecting households from excessive increases and ensuring councils have sufficient resources to meet local needs. In Hammersmith and Fulham, that balance is now at the centre of a major financial discussion that could have a direct effect on household budgets across the borough.