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A west London borough described as “David Cameron’s favourite local authority” is to slash its council tax for the seventh year out of eight and has urged other town halls to follow its example.

Hammersmith & Fulham council leaders today said its average band D bill will fall next year by three per cent to £735, half the national average.

Council leader Nicholas Botterill, said: “This council has done more to reduce the cost of living than virtually any other organisation in the country.

“By rooting out unnecessary costs and cutting debt, we have become a leaner council, focused on the services that matter to residents, and passed savings back to the taxpayer.”

He added that other public bodies should follow the council’s example. The three per cent cut would mean that council tax bills will have fallen 20 per cent in cash terms over the past eight years, or almost 40 per cent if inflation is taken into account.

The council said it was on course to slash £43 million from the cost of running the borough by 2015/16.

Stephen Cowan, Labour leader at Hammersmith & Fulham, said: “I welcome the tax cut and confirm that Labour will cut council taxes and stick within the budget should there be a change of administration next year.

“But it is notable that the Conservatives now raise more money from parking charges and traffic fines than they do council tax, with the number of fines increasing from 3,995 eight years ago to a staggering 72,837 last year.”

Local Government Secretary Eric Pickles said: “Cutting council tax by 20 per cent is a phenomenal achievement.”