Croydon agrees 15% council tax increase - how much will it go up by?

After a three-and-a-half hour meeting Croydon Council agreed a 14.99 council tax hike as part of its 2023/24 budget.

The budget was forced to go to two votes and was passed after Labour abstained from voting.

For the second week running, protesters gathered outside Croydon Town Hall as councillors met again to vote on the authority’s budget after it was voted down by opposition councillors on March 1.

Croydon Council deadlock

Two hours into the meeting on Wednesday night (March1) the council voted down the budget again. Opposition councillors voted against with 36 votes to 34.

After the vote - which saw Labour, Green and Liberal Democrat councillors vote against it - councillors were warned of the implications by the council’s Section 151 officer, Jane West.

She said: “(If) it is not possible to process and send out council tax bills to residents, the whole council tax payment process will be delayed not just for the council but for the GLA.”

She said the decision would cost the council £20m a month until it was resolved and warned the decision would “undermine the council’s reputation locally and nationally”.

The meeting was adjourned for 40 minutes while councillors went off to discuss a way forward in their political groups.

Labour abstains

On returning, leader of the Labour opposition Councillor Stuart King confirmed his group would be abstaining on the budget. He said the group did not want to “embroil the council in a deadlock scenario”.

Cllr King said Labour disagrees with the 15% rise but could not “in all good conscious” plunge the council into further financial turmoil.

The council’s two Green Party and one Liberal Democrat councillors voted against the budget, meaning there were 34 votes for, three against and 33 abstentions.

Grant Thornton

A letter from the council’s auditors, Grant Thornton, published on the day of the meeting, outlined that if the council did not agree to the budget it would not be able to meet its legal requirement of setting a balanced budget.

It read: “Failing to pass the budget, will not only be unlawful, it would make a bad financial position worse and damage the council’s reputation even further.”

After the council issued its third bankruptcy notice in three years, it was given permission by central government to raise council tax by 15% in February without the usual requirement of going to a referendum. It has also asked government for support in the form of £224m in bailout loans, known as capitlisation directions, and a £540m debt write-off.

The government’s Department for Levelling Up Housing and Communities said it is “minded to” issue the capitlisation directions but conversations about the debt write-off are ongoing.

Croydon’s mayor

Jason Perry, the Conservative executive mayor of Croydon, said after the meeting: “I’m pleased that council has agreed this difficult budget which will help us deliver services for residents whilst taking much-needed action to fix Croydon’s finances.

“This is not a budget that I wanted to set, but it is a budget that will help us to protect vital services for our residents. No one wants to increase council tax, but the council is delivering £36m savings this year already – we simply cannot make further cuts and continue to deliver the services our residents need.

“We have demonstrated that we will not shy away from taking tough decisions locally to do the right thing in the long term for our borough, and in our ongoing negotiations with the government I am pushing hard for the best possible deal for our residents.

“Their confirmation of our capitalisation request for this year is welcome and we look forward to hearing from them on our additional requests including a write off of some of Croydon’s debt.”

How much will Croydon Council tax rise by?

Council tax is based on the value of a property. An average property - in Band D - is paying a total of £1,965.66 in 2022/23.

Part of this is the Greater London Authority’s (GLA) share (£395.59), but the larger part goes to Croydon Council (£1,570.07).

In 2023/24 the GLA’s precept will rise by £38.55 to £434.09.

Croydon can now raise its share by £235.51 to £1,805.58.

This means an average household will pay an additional £274.06 of the year - an additional £5.27 per week, taking the total to £2,239.67.