Gove green lights above-threshold council tax rises at Croydon, Thurrock and Slough to tackle continued financial woes

The Government has given the go-ahead to three financially troubled councils to raise council tax by as much as 10% without a referendum.

Thurrock Council, Slough Council, and Croydon Council requested the approval for council tax increases following significant failures in local leadership, governance and financial management.

Croydon will increase council tax by 10%, the highest of the three, while Thurrock and Slough will raise taxes by 5%. None of the councils will hold referendums on the change.

Councils can increase council tax by 5% without a referendum, meaning the councils' request for additional tax hikes could see Croydon's council tax rise by 15% in total, while Thurrock and Slough council tax could go up by 10%.

All three local authorities have effectively declared bankruptcy by issuing section 114 notices in the last two years.

Thurrock issued its notice in December of last year in light of a "grave" financial position that left the local authority with a £470 million in-year funding gap.

Croydon has issued three separate 114 notices and currently reports debts of £1.6 billion, blaming financial failures.

A section 114 notice was issued by Slough in July 2021. At the time, the council cited the financial implications of the pandemic alongside issues with the council's finances that "go back several years," which it had uncovered.

Commenting on the move to raise council tax at Croydon, Jason Perry, Executive Mayor of Croydon Council, said: "I know this is going to be difficult for people in Croydon, particularly when they face other pressures but without the proposed increase, the council would need to make a further £20m of additional 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."

Croydon is also in talks with the Government to agree on a reduction in the council's long-term debt and is set to agree on a new Capitalisation Direction to address the historic financial failures which still sit on the council's balance sheet.

Slough Councillor, Cllr Rob Anderson, lead member for financial oversight and council assets, said: "Given the need to get the council back on a sound financial footing and with inflation over 10%, this increase was unavoidable if we wanted to protect our services."

In a written ministerial statement, Michael Gove, Secretary of State for Levelling Up, Housing and Communities, said: "Given the exceptional circumstances of these councils, including unprecedented financial deficits driven by poor decision making in the past and the need for ongoing government intervention to drive their improvement and recovery, the Government has decided not to oppose the requests."

Gove later added: "The Government is of course conscious of the impact on local taxpayers, particularly those on low incomes, of having to foot part of the bill for their councils' very significant failings. We have been clear to each of the councils that in implementing any additional increases, they should take steps to mitigate the impact on those least able to pay."

Adam Carey