A budget proposed by Mayor Jason Perry failed to pass through the Council late on March 1 due to the opposition to a proposed 15% council tax increase.

The new budget was unanimously opposed by Labour, Liberal Democrat and Green Party members who had 37 votes while all 33 Conservative members of the Council voted to pass the motion.

Leader of the opposition party, Stuart King, a Labour Councillor, said: “Whilst we have concerns about some elements of the wider budget, our principal objection… is to the level of the increase that’s proposed for the council tax this coming year. In our view the increase is excessive”.

The rejection of the proposed budget means that a further meeting must be held on March 8 in which a revised budget will be put forward.  

King added: “We believe that the Mayor must use the period between now and 8 March to look at alternative options that will balance the budget without the need for a 15 per cent increase.”

The Government gave Croydon Council special permission to raise council tax this year without a public referendum after the borough announced its third bankruptcy notice in just two years in November 2022.

The proposed budget also included a £2 million hardship fund which would seek to provide payment support to those most financially vulnerable. This is on top of £33 million which has been allocated overall to the Council Tax Support Scheme.

However, concern was expressed over a hardship fund would be allocated with members of the opposition expressing concern for a lack of clarity on how the fund will be ensured to reach those most in need. Residents who receive council tax support will be updated about any changes to the amount they receive in their annual decision notice, due in mid-March, the Council have said.

Chair of Scrutiny, Rowena Davis said: “We don’t honestly know if [£2 million] is going to be enough yet. This is… the highest rise in the country and is unprecedented in the cost-of-living crisis that continues to happen.”

The evening of the budget meeting saw campaigners protest the 15% tax increase outside Croydon Town Hall, where the Council’s Budget Meeting was held.

The protest was attended by the GMB trade union officer Rachael Baylis who spoke out against the rise inside the town hall. The meeting also heard details of a 25,000-signature strong petition opposing the council tax increase, despite this going against normal council meeting protocol.

Despite criticism from the opposition, Mayor Perry justified the budget proposal saying that a council tax hike is necessary to balance the budget as the borough faces £1.6bn of debt.

The mayor said that the alternative to a council tax increase would be making service cuts of £20 million, which he described as “unsafe and unfair”. The proposed budget included £36 million worth of cuts to services, according to Inside Croydon.

Members of the opposition argued however that even with the council tax rise bringing in £20 million per year, this will have little impact on the £1.6 bn debt that the Council faces. 

Allegations of mismanagement leading to the council’s unprecedented levels of debt were heard from both sides during the meeting with Conservative members citing the recently published Penn report into financial mismanagement within the council and many stating that debt doubled under the previous Labour leadership.

Cabinet Member for Finance Jason Cummings also attributed the debt to the previous Labour administrations claiming that they had been “over-focussing on lobbying central government” for increased funding.

Mayor Perry expressed regret for the lack of government funding for Croydon but urged the council to focus on how they can balance the budget without additional state funding and “live within [their] means”.

He also claimed that Labour had not suggested any alternative to a council tax increase with Labour arguing that they were not given adequate time to do so.

During the meeting, Councillor for Thornton Heath, Tamar Nwafor, highlighted that a 15 per cent rise in council tax would disproportionately affect Black and ethnic minority groups, who make up the majority of Croydon’s residents with Councillor Davis noting that an equality impact assessment on the budget was only produced after the scrutiny process had concluded.

Mayor Perry will present a new budget to the council on March 8, which should take into account the objections raised by councillors. The budget must be approved if Croydon is to meet the statutory deadline of March 11 for setting the council tax and budget for the coming year.