The council is hoping businesses will agree to a one per cent tax increase in order to raise £5million for town centre improvements.

Croydon Council is planning to ballot businesses on the plan which will raise extra money over the next five years for schemes such as increasing street cleaning and providing more business support.

The tax increase would be part of a private sector project to make Croydon a Business Improvement District (BID) – a scheme introduced by the Government last year as a way for businesses to contribute to an area’s economic development.

The rules of a BID mean those businesses benefiting from the improvement will contribute to the cost – even if they had not been in favour of establishing it.

Money raised by the higher annual business rate would be ring-fenced and would be spent in addition to the money already paid by the council for existing services.

Officers from the council will help promote the scheme ahead of a secret postal ballot next October or November, in which only businesses located within the BID area will be able to participate.

The council estimates the cost of running the ballot will be £8,000 and pledged its support for the scheme at last Monday’s cabinet meeting.

The proposed BID area will lie within the boundaries of Cherry Orchard Road, South End and Wellesley Road.

Croydon would be following towns like Kingston, which is already a BID, if the ballot returns a yes vote.

If approved the BID could be up and running by 2007.