Council tax hiked by 15 per cent after Labour council borrowed £535MILLION with no repayment plan - 'Taxpayers picking up tab for failure!'

Council tax hiked by 15 per cent after Labour council borrowed £535MILLION with no repayment plan - 'Taxpayers picking up tab for failure!'
Facebook / Mayor Jason Perry
Carl Bennett

By Carl Bennett

Published: 08/02/2023

- 16:57

The council declared itself bankrupt for the third time in November 2022

Council tax in Croydon will be increased by 15 per cent after the local authority declared itself bankrupt in November - the second time in three years.

Croydon Council requested permission to force a rise without a referendum, with Conservative mayor Jason Perry blaming the increase on the “financial failures of the previous administration,” branding it a “toxic legacy”.

Between 2017 and 2020, the previous Labour council borrowed £535million without any debt management plan, according to a strategy report.

Croydon Council offices
Croydon Council offices
Flickr / osde8info

In November 2022, the council admitted it was unable to balance its budget for 2023/24, declaring itself bankrupt – having debts of £1.6billion.

Their estimations showed it would need to reduce its spending by £130million in the next financial year in order to balance the budget.

Issuing a statement, Mayor Perry said: “The toxic £1.6billion debt and financial failures of the previous Administration left Croydon with a hollowed-out council, reliant on government bailouts.

"My focus has been on opening the books and taking necessary steps to get the Council back on a sustainable footing.

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

Perry added: “I know this is going to be difficult for people in Croydon, but without the proposed increase, the council would need to make a further £20m of cuts this year, putting vital services to vulnerable residents at risk.”

Twitter / Jason Perry

They are not the only council to impose a double-figured hike, with Thurrock and Slough councils both having requests to increase council tax by 10 per cent approved.

They also declared bankruptcy. With Thurrock council asking the government for a £636million bailout – alongside the tax rise.

Current laws mean councils can only raise tax by a maximum of five per cent a year without requiring a mandatory referendum.

Defending their support of the hikes, the Government said: "Given the exceptional circumstance in these councils and unprecedented scale of financial deficits in each council, the government has agreed to the requests.

"In line with their requests, Thurrock and Slough will be able to raise council tax by an additional five per cent above referendum principles applied to other councils, and Croydon will be able to raise an additional 10 per cent."

John O’Connell of the TaxPayers' Alliance, said: “Taxpayers will be picking up the tab for the dismal failure of their local authority to get a grip on spending.

“Time and again, bungling bosses have left council finances deep in the red, expecting hard working residents to bail them out.

“Any increase in council tax should come alongside sensible savings from waste in local budgets, including top level salaries.”

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