London Labour council warns it may raise council tax by 150%

Hammersmith and Fulham council, a Labour authority, has warned it may need to raise the council tax by 150% to maintain current services following government cuts. The council's cabinet report, set to be published on Monday, states that such a tax rise would cost Band D households an additional £29.11 per week in 2027/28. The council is losing more than half of its government grant under Labour's "fair funding" review, which aims to redirect cash from affluent areas to places hardest hit by austerity.

The review has led to a £150.5m reduction in government funding for the council, which is set to plummet to £72.4m over the next four years. The council has been given the power to raise bills above the 5% cap next year to balance its budget. The report outlines three scenarios for the council tax element increase, with a 150% increase leaving a budget shortfall of £20.6m.

A family in a Band D property would face a weekly increase of £29.11 under this scenario. Despite the proposed tax hike, the council argues that it has kept bills low through "ruthless" cost-cutting measures and that its inclusive economic growth strategy has brought in over £6bn in investment and created 17,200 jobs. However, critics argue that the council's funding formula risks undermining the government's aim of ensuring funding follows need, citing flawed deprivation measures.