Approval has been given to the “most shameful” budget ever presented in Southampton City Council in a day critics said should never have happened.

Council tax will increase by 4.99 per cent – the maximum amount allowed without a referendum – meaning a Band D home will face a £1,812.69 bill in April for 2024/25.

Council tax premiums will also increase for empty properties for 12 months or more in 2024/25 and second homes from 2025/26.

The now-approved Southampton City Council budget for 2024/25 was balanced thanks to the £121m exceptional financial support approved by central government last week.

The council plans to spend £595m next year on local services, excluding housing. When combined with the spending within the Housing Revenue Account (HRA) and the capital programme (both general fund and housing), the total council spending is planned at £837m.

The budget includes the council tax hike, an increase of £86,22 for Band D homes, and it was dubbed the “most shameful” by the opposition.

Leader of the council, Cllr Lorna Fielker, highlighted the “challenging” position but praised the commitment of her administration to make the budget proposal work.

Cllr Fielker said: “This Labour administration seeks to always be honest with residents about what is happening in the council, and it is really important for us to do that. We don’t want to hide behind anything.

“There is no doubt this is a very challenging budget for us. We know why we are here, and we know where we need to go. The budget has been set based on robustness. There is confidence there from our Section 151 officer that those plans can be delivered.

“This labour administration is committed to putting in the work to enable that to happen.”

Tory leader Daniel Fitzhenry, criticised the situation where the council is, saying the situation “wasn’t inevitable” and “didn’t need to happen.”

Under his plans, if elected in 2022, his administration would have developed a plan to tackle what was “clearly obvious”, the structural deficit.

Cllr Fitzhenry said: “We would have never, ever been in this scenario you are in right now.

"This situation we find ourselves in was not a necessity; it was not even an option. And here you are, accepting £121 million on the credit card at five to six per cent per annum.

"None of the interest charges are in your budget, so your budget gap for next year is not £40 million, which is £42 million, probably if you borrow all the money.

“God forbid your Labour government because you are going to find yourselves in a very bad position. This scenario is on your own making […] It is a very shameful place to be as a council.”

Fellow Conservative Cllr Peter Baillie said that the Labour Party should be “ashamed” of the budget they presented on a day that could have been avoided.

Cllr Baile said: “Never before in the history of Southampton being unitary has the ruling group put forward a budget that rebased £40 million for exceptional financial support just to make it balanced.

“It is a sad day indeed for the people of Southampton, and it is a day that could and should be avoided.

“Today’s financial mess is not just happening. It has taken years to get to this point, and the size is now huge. We had to go to the government to ask to borrow money. The idea we are told is to use as little of this borrowing as possible, but it’s hard to see how much of it would not be used very quickly.”

Cllr Bailie pointed out that of the £121 million emergency support from government, almost £100 million is gone. Some £40 million is planned to plug the 2024/25 budget gap, another £10 million will be used for the Transformation programme, and £52 million will cover equal pay claims.

He added that paying the exceptional financial support back over 20 years will cost the council £9 million a year, putting it under “significant budgetary pressure”.

Cllr Baile said: “But then it gets worse, the budget for 25/26 has a £62 million shortfall. A structural deficit that you have until this November to work out which services will be cut or transformed to meet that target. And if the target is not met, then it is difficult to see how 114 notice (effective bankruptcy) would not be issued.”

“This is a sad day for Southampton. Labour should hang their heads in shame for the financial mismanagement of the city.”

The budget was carried out without the support of the Green Party and the Conservative Party.