A bankrupt London borough failed to sign off its budget on Wednesday night after a mass demonstration against plans to hike council tax by a record 15 per cent.
Hundreds of people descended on Croydon’s town hall to protest against the “unfair” proposals that would see around £235 added to the average household bill from April.
Councillors voted down the increase by 37 votes to 34 following a three and a half hour budget meeting.
Croydon issued its third bankruptcy notice in just two years in November and asked ministers to write off £1.3bn of debts, including £500m run up through a series of misguided commercial investments by the previous Labour administration.
The Government gave the borough special permission to raise council tax by the record amount this year without a public referendum.
Ministers have also said they are "minded" to give the local authority more than £220m worth of bailout loans over the next few years to help the town hall get "back on a sustainable footing”.
The borough's Conservative executive mayor Jason Perry, who was elected in May, said he "recognised the anger at the proposed increase" but it was necessary "given the scale of the financial chaos".
"It is not fair," he added.
"I assure you it is not a proposal we put forward lightly."
Strong turn out at #Croydon Town Hall tonight to campaign against the Mayor’s proposed Council Tax hike. And it cut through - the proposal was defeated 37-34 #FundCroydonFairly pic.twitter.com/AjVFoXfk9S
— JG (@JohnnyGiles) March 1, 2023
Labour, Liberal Democrat and Green councillors joined forces to vote against the rise.
Ria Patel, from the Green Party, said: "Residents should not be paying for the mistakes of the previous administration."
If passed, the proposed rise would see Band D homes pay more than £2,230 a year, including an almost £40 hike by Sadiq Khan for City Hall’s share of the bill.
The council must legally set its budget by March 11. Another meeting has been scheduled for Wednesday.
Households in band A to D will get the payment, which the council said would help with the cost of living.
Some £1.7million of funds has been ringfenced to pay nearly 17,000 households £100 each if they are not eligible for existing support grants.
The town hall also agreed to freeze its portion of the council tax, adding just two per cent to pay for social care.
Council leader Elizabeth Campbell said: “We have a clear focus in the borough, and that is down to the efforts of our residents and businesses to be involved and engaged.
“The foundation of our approach has been set by the bereaved families and survivors from Grenfell, who told us directly that the legacy they want to see from the tragedy is for this council to simply be the best in can be for all residents.
“We are accepting this challenge. The hard work continues and we will redouble our efforts, from today.”
