Residents of Croydon face a huge 15 per cent rise in their council tax from April after the Government approved the increase following the councils declaration of bankruptcy for the second time in three years.

Croydon Mayor, Jason Perry, blamed the increase on the failure of the previous council administration and said in a tweet on February 6: “The toxic £1.6bn debt and financial failures of the previous administration left Croydon with a hollowed-out council, reliant on government bailouts.”

The current Government has given the Conservative Mayor permission for a one-off increase of 15 per cent. Perry said that this amounted to an extra £4.50 a week for the average property. The rise amounts to 10 per cent more than most other local authorities.

He 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. This would be on top of the £36m savings that have already been proposed for the coming year’s budget.”

Under current legislation, a council can only increase council tax by a maximum of five per cent per year without a referendum.

In order to provide additional funding to help councils recover financially, the UK Government acknowledged that it had received requests from Croydon, Slough and Thurrock councils to be given the discretion to increase their council tax by more than five per cent.

Number 10 said in a statement: “The Government has granted the requests given the unique circumstances in these councils and the enormous scope of budgetary shortfalls in each council.”

Labour MP for Croydon North, Steve Reed, who opposed the plan, said: “Croydon Conservatives are planning to wallop residents with a staggering 15 per cent council tax hike in the middle of a Tory cost-of-living crisis instead of getting fair funding from their own Government. What planet are they living on? Residents simply can’t afford this.”

Labour MP for Croydon Central, Sarah Jones, called for the Mayor to reconsider his decision and offer a better deal. “I am deeply disappointed with the Conservative leadership in Croydon,” she said in a tweet. “In the middle of a cost-of-living crisis fuelled by disastrous economic policy the Conservative government, it is unacceptable that Croydon Council has heaped an extra burden onto taxpayers.”

Perry further said in addition to the council tax increase, the council was negotiating with the Government to reduce the council’s long-term debt and was seeking agreement on a new capital strategy to address the past financial failings still reflected on the council’s balance sheet.

He added: “These actions, together with the ongoing initiative to restructure the council’s operations, are essential and necessary to transform Croydon into a locally governed entity that can support its finances.”

The Mayor said he remained committed to holding former council officials accountable for the financial collapse.