Hammersmith and Fulham weighs council tax rises of up to 150% to fill £160m gap

Hammersmith and Fulham Council says avoiding cuts to services is its priority as it starts work on its budget. Its Government funding is set to drop to less than half its current level within four years.

Speaking at Cabinet on Monday 12 October, council leader Stephen Cowan said the Labour-led authority wants to “strip out all that back-office waste” to protect front-line services. The council, he said, must either persuade the Government to change course or bring in the biggest cuts programme in its history. It is already working on the second. “We haven’t got the money,” he said. He added that councils often turn to services first when they need savings. Hammersmith and Fulham wants to avoid doing that.

Council tax rise of up to 150% in April

The council had already warned that the Government’s Fair Funding reforms could push council tax up by 150% in April. A report to Cabinet set out three scenarios: increases of 100%, 125% and 150%. Only the 150% option balances the books across the four-year period.

That rise would take a Band D bill to £2,522.50 a year, not counting the Greater London Authority precept. It works out at an extra £29.11 a week. Council officers estimate the budget gap at £160m.

Why Hammersmith and Fulham is losing funding

The reforms aim to rebalance funding for councils so that it reflects more closely what each one needs to spend and what it can raise. In their report, officers said the new formula makes councils with historically low council tax raise their rates to the national average. Hammersmith and Fulham is one of those councils. At the meeting, Cllr Ree said the blow to the council’s finances came from this equalisation of council tax.

On deprivation, the borough ranks 120th out of 296 local authorities. Its low tax rates, though, mean it faces cuts equal to 40% of its annual budget.

Ministers have agreed some transitional funding for the councils hit hardest. Hammersmith and Fulham is one of six authorities given permission to raise council tax above the 5% cap. Westminster and Kensington and Chelsea intend to contest the scale of the cuts by using the Sustainable Communities Act. Wandsworth has said it will take the same route and has warned it may need a 94% rise in April. Hammersmith and Fulham ruled out that option after taking advice from a KC.