Croydon Council has revealed plans to again increase the council tax rate by the maximum amount allowed, meaning residents face a further rise of £118 a year.

The council has declared its intention to raise the tax by 4.99 per cent – the most it can do without calling a referendum – from April next year.

Croydon’s Mayor Jason Perry says the increase is needed due to financial difficulties and the need to address the historic £1.4bn debt it needs to clear.

If the proposals go ahead, the bill for a band D property would rise from the current level of £2,366.91 a year to around £118 more.

The proposals would likely be approved with the budget, which typically happens around March.

Cllr Perry insists the figure is not beyond what the government has recommended for councils across the country – indeed most councils typically opt for the maximum increase as pressures on local government finances increase.

The council says that in 2025/26, the cost of paying off its debt will amount to £69m representing 16 per cent of its core spending power.

Currently, the council is only servicing the interest on the debt and is selling off its assets as a way to do so.

In the last three years, the council says it has saved £137m from asset disposals, cuts and restructuring.

It adds that it has an extra £30m of planned savings for 2024/25 and that these figures mean it has saved more than any other London council.

The tax increase forms part of the council’s budget proposals published on Wednesday (October 9).

These will feature in their Medium Term Financial Strategy, which will be considered by the cabinet on October 16.

However, the decision to once again raise council tax means that it now stands at its highest ever level for the borough. During a full council meeting on Wednesday night, Croydon’s leader of the Labour opposition, Stuart King, tore into the Tory administration’s current financial record and questioned the Mayor’s election promise to balance the books.

He said: “The council is now forecasting a staggering £35m departmental overspend.

"This is an unprecedented position coming out of the first financial quarter. As a result, even more cuts to services are going to be required and we’re going to have to raid reserves in order to fix the gaping hole in the numbers.

“Isn’t it clear for all to see, from residents, staff, members and indeed the government that not only are you not listening to Croydon but you’re not fixing the finances.”

Deputy Mayor Lynne Hale, standing in for an absent Mayor Perry hit back at Croydon Labour and reaffirmed the council’s commitment to what it calls ‘robust financial management’.

She said: “It is dutiful of me to remind you why we are in this position in the first place. You brought the council to its knees and bankrupted our borough.

“We are now having to make tough decisions that you refused to make. We don’t want to make them, but if [there’s a] possible chance of delivering stability to this council and to be able to look after our residents, we absolutely have to make these tough decisions.”

Accompanying the proposals is a call from the council for more support from central government. It expects that the imminent Autumn budget announcement, due to be made on October 30, will contain more information about Chancellor Rachel Reeves’ plans for local government.

In previous years the council has been able to rely on a £38m debt capitalisation from the government, which has allowed it to borrow or sell assets in order to meet its general expenditure. It has said that it will have to wait until October 30 to find out whether it can continue to do so.

The council has also set out a number of plans in its proposals, which are designed to address long-term stability and its much-publicised transformation plan, ‘Future Croydon.’

The statement outlines the plans as follows:

Organising to become the most cost-effective council in London and provide a better, more efficient service for residents.

Working more closely with public, private and voluntary sector partners, changing how some services are delivered to better meet residents’ needs.

Acting more effectively as ‘one council’. This means making it simpler for residents to get in touch, access council services, and find information, advice and support, including ‘self-service’ digital options where appropriate.

Restoring pride in Croydon’s places, with a focus on attracting investment into the borough to regenerate the town centre and local neighbourhoods.

Mayor Perry said: “My top priority is to fix our council finances so that we can provide Croydon residents with the good services and value for money they rightly deserve. In the past two years, through a relentless focus on robust financial management, we have made more savings than any other council in London. Our strong progress in improving our council has been recognised by our government-appointed independent panel.

“Yet as we develop our budget proposals for next year, we are being impacted by a recent and severe escalation in the financial pressures facing all councils. On top of these unprecedented challenges, Croydon is servicing a £1.4bn historic debt burden. That is neither sustainable nor fair on our taxpayers and I have written to the Secretary of State about the need for an urgent solution.

“In our 2025/26 budget, we set out the action we are taking to help meet these challenges, from making savings, to robust financial management and transforming the way we work to put residents first. But we need a response from the government on the funding crisis facing the sector – councils across London have raised these issues and I look forward to their response in the Autumn Statement.”