Croydon 15% council tax hike: How much will it rise by? Why is it happening?

Following “significant failures” in financial management at a London council, the government has given permission for it to raise council tax by 15% - an additional £235 per year for an average household.

In November 2022, Croydon Council admitted it could not balance its budget for 2023/24 and issued a Section 114 notice, declaring effective bankruptcy for the third time in two years.

On Monday the government granted permission to three authorities to raise their share of council tax by more than 5% - something that would usually spark a referendum.

Thurrock and Slough are allowed a 10% - but Croydon has been given permission for a 15% increase.

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.

What the government said

The government said in a statement: “Following significant failures in local leadership and financial management, the government received requests from Thurrock, Croydon and Slough for the flexibility to increase their council tax by an additional amount, to provide extra funding to support their financial recovery.

“Given the exceptional circumstance in these councils and unprecedented scale of financial deficits in each council, government has agreed to the requests. In line with their requests, Thurrock and Slough will be able to raise council tax by an additional 5% above referendum principles applied to other councils, and Croydon will be able to raise an additional 10%.”

What Croydon said

In November Croydon estimated it would need to reduce spending by £130m in the next financial year to balance the budget, a legal requirement for local authorities.

Since then it has been in discussion with the government and is awaiting news on financial support.

Conservative mayor of Croydon Jason Perry said in a statement on Monday that the “toxic £1.6bn debt” of the previous administration had left the borough “with a hollowed-out council, reliant on government bailouts”.

“Given the scale of this toxic legacy, getting back on track will require incredibly difficult decisions,” he said. “That is why, as part of a wider package of support we are negotiating, the government has given us permission to propose a one-off increase in council tax of 15% this year. This amounts to an extra £4.50 a week for the average property.”

Croydon Council is scheduled to discuss the budget on March 1.