Hammersmith and Fulham Council is proposing to increase Council Tax by nearly 3% for residents as part of its budget for the 2026/27 financial year. The increase, which includes a social care precept, will amount to an additional 92 pence per week for households in Band D properties, generating an estimated £4.4 million annually. This funding is described as 'essential' to ensure continuing financial resilience, protect the council's funding position over the medium term, and meet the challenges posed by increasing demand and inflation, while balancing the impact on local council taxpayers.

The proposed rise was discussed at a budget meeting on Tuesday, January 27, 2026. The council faces a challenging financial environment, with ongoing demand-led pressures in adult social care and children's services, alongside the impact of funding reforms. Significant pressures are anticipated in 2027/28 and beyond due to government modelling of a 5% plus £150pa increase for the next two years. Changing demographics and a weak national economy are expected to mean demand for council services will continue to rise. Specifically for Adult Social Care, the report highlights significant financial pressure, which include: Demographic demand growth and complexity of need resulting in significant cost pressures including ever increasing hospital discharge pressures into social care market. Pressures within the care market and the impact of cost-of-living. Price pressures both existing and following new competitive tender activity. The long-term implication is that the council will continue to face financial challenges in the years to come.

Despite the proposed increase, the council highlighted that its Council Tax remains among the lowest in the country. The administration has a record of cutting or freezing council tax multiple times since 2014. The budget plans for 2026/27 include proposed savings and efficiencies totalling £17.9 million across various departments. These savings are broken down into £9.5 million from service savings and £8.4 million from collection fund savings.

The £9.5 million in service savings are detailed as follows:

  • Housing: £1.2 million from the Homeless Reduction Strategy.
  • People: £3.2 million from Adult Social Care Transformation (Care Packages/New Residential Care – 4%).
  • FCS (Finance and Corporate Services): £0.4 million from improving collection of Housing Benefits/Recovery of Summons Costs, £0.5 million from Funding of Local Support Payments by Crisis & Resilience Fund, and £0.5 million from Credit Card Transactions Fees.
  • Place: £1.3 million from Commercial Income, £2.2 million from Redesign Service Staff Teams (Agency/Vacancy Management – 1.5%), and £0.2 million from Waste Disposal (Increasing Recycling – 50% in street properties).

The £8.4 million in collection fund savings are broken down as:

  • Resources: £4.6 million from Council Tax (Collection Rates/Reducing Arrears/Second Homes Premium - £0.9m / CTB1 Tax Base) and £3.8 million from Business Rates (Collection Rates/Arrears).

Key financial elements discussed in the budget report include provisions for pay inflation at 2.5% (£4.0 million) and price inflation at 3.2% (£6.9 million). The strategy to manage these inflationary pressures, alongside other budget items, is to implement the aforementioned 'Savings Proposals' totalling £17.9 million. The report also mentions driving forward service transformation programmes, to improve efficiency and outcomes as part of the strategy to ensure continued strong medium-term financial governance.

The 'funding reforms' impacting the council's finances are primarily the 'Fair Funding Review 2.0' and changes to the 'Business Rates Retention System'. The Fair Funding Review 2.0 aims to create a simpler, needs-based system for allocating resources, featuring a reset of the Business Rates Baseline, grant simplification, multi-year certainty for councils, transitional protection funding, and a focus on deprivation. From April 2026, the Business Rates Retention System will see the council retain 10% of estimated gross rates collectible within the borough, while the tariff paid to the government quadruples from £12.8m in 2025/26 to £53.6m in 2026/27.

Further details on the budget and savings proposals can be found in the Budget Presentation and Appendix 1 - Savings 2026-27.