Council Accused of Draining Reserves to Balance Books
Opposition claims 'once in a lifetime' contingency funds spent
Stephen Cowan (left) and Victoria Brocklebank-Fowler (right)
February 27, 2025
Hammersmith and Fulham Council has been accused of using its ‘once-in-a-lifetime’ cash reserves ‘at pace’ to avoid slipping into bankruptcy. The authority approved its budget for 2025/26 at a full council meeting on Wednesday night (February 26), praising its ‘prudent’ balancing of the books, which includes an 88p-a-week rise in council tax.
However, the opposition leader Victoria Brocklebank-Fowler claimed it was only able to do so because it’s using up its reserves, and accused the Labour administration of producing a budget ‘full of guff with very little transparency’.
In his speech to councillors, Hammersmith and Fulham Council Leader Stephen Cowan said the budget focused on crime, improving health, education services and housing. The Labour councillor said, “This is a prudent budget that tightly manages our finances and looks to be ready for whatever happens, just as we were in the pandemic.
“But it is also a budget which takes the innate optimism at the heart of our Labour values that we can share a better, brighter future for our citizens and it seeks to drive that future through, relentlessly, no matter what circumstances are thrown at us.”
But the Conservative opposition leader criticised the national Labour government’s latest budget, which she accused of stunting growth in the UK economy, and slammed the use of financial reserves by council’s Labour administration.
She said, “The budget is balanced, however precariously, and we have avoided the fate of section 114. Nevertheless, the MTFS (medium term financial strategy) is majorly concerning. Your ability to make annual savings is small and your reserves, both corporate and service, can only be spent once. You are borrowing at expensive rates and using once-in-a-lifetime reserves at pace.”
At the start of 2025/26, the council anticipates holding a general balance of £21.6 million and earmarked reserves totalling £73.5 million. Despite the planned reduction, these reserves are currently slightly above average, as a percentage of net revenue expenditure, compared to other London boroughs
A report by the council said its reserves were at an adequate level to deal with ‘anticipated risks and liabilities’. The report read, “All reserves are regularly reviewed to ensure they are appropriate balances and in line with strategic priorities and may be reallocated to align with any change in strategy or to meet budgetary pressures should the budgeted contingency and mitigation plans not be sufficient.”
Councillors passed the budget which included a council tax increase of 2.99 per cent and a social care precept rise of a further 2pc.
Hammersmith and Fulham has the third-lowest council tax rate in the country, and has cut or frozen it five times in the last 10 years. It also has an extensive council tax support scheme, with almost four in ten households receiving some form of discount at a time when other London councils are cutting their schemes to plug budget black holes.
It is one of only three London councils to offer a 100 per cent discount for those most in-need. The budget sees £2.4m and £1.1m of ‘efficiencies’ in Children and Education services respectively. The ‘investments’ listed include funding to further develop Family Hubs, support for frontline social work and work to improve school attendance records. ‘Savings’, which are a combination of cuts and additional income, include from retendering contracts for travel care and a programme designed to prevent families splitting up.
At a previous meeting, Cllr Rowan Ree, Cabinet Member for Finance and Reform, said revenue funding from the Government was down from £164m in 2010/11 to £132m for 2025/26, a drop the council was having to mitigate alongside challenges such as an ageing local population and a ‘sluggish’ national economy. He pointed to some examples of new funding announced by the Government for councils, including an extra £2 billion for social care and general services and £1bn for the Household Support Fund.
In total Hammersmith and Fulham will have £12.3m of additional investment and £5.1m of efficiencies for 2025/26. Key areas of investment include £3.4m for community safety and social inclusion through funding for the council’s Law Enforcement Team and Gangs Unit, £2.8m for Adult Social Care and £1.2m for homelessness.
Ben Lynch - Local Democracy Reporter