Croydon City Council has issued a third Section 114 Notice after the Chief Financial Officer and s151 Officers concluded that the London Borough would be unable to balance its budget for the next financial year.
Local government’s new mayor, Jason Perry, has sent a letter to Secretary of State for Level Up, Housing and Communities, Michael Gove, asking for more government help.
Mayor Perry, who was elected in May, said the sheer scale of the financial problems he inherited “means the council cannot recover without new government solutions for long-term financial sustainability. I will,” he claimed.
Mr. Croydon said the mayor’s “open the books” exercise, a forensic investigation of the state of the city council and financial processes he commissioned, would reveal more unresolved historical accounting risks that would put next year’s budget at nearly zero. It said £48m of new costs had been added.
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Local authorities added that the inherited debt level, which totals £1.6 billion (of which £1.3 billion is General Fund debt), has also become important to the sustainability of parliamentary revenue budgets at current interest rate levels.
“Parliament now has to pay £47m out of the budget to pay off this debt before it can spend money on services to residents. means it costs more to provide,” it said.
Croydon claims it is “doing everything it can to support its recovery through its savings and transformation programmes” and has already accumulated over £90m in savings and over £50m in assets over the past two years. He said the sale had been completed. In 2023/24 he will save £44m and around £100m in proposed asset disposals over the next few years.
“However, it will not be enough to cover the council’s expenses and ongoing toxic debt burden as it is too large to manage sustainably without further support from the government.”
The Council estimates that £130m in spending will need to be cut in the next financial year.
Croydon said it was on track to balance the budget for the year and released an update on its medium-term financial strategy to be discussed by the Cabinet on 30 November.
Croydon Mayor Jason Perry said: Even with government support, the next few years will be very difficult financially for Croydon Council. Ultimately, this means Congress needs to do what it needs to do and spend less, and cut spending significantly.
“While I am determined to fix what the previous administration has broken and protect our residents, staff and boroughs as much as possible, I am committed to restoring the Council to its restoration and long-term financial and operational sustainability. It will take a long time to get it back, it takes time and a radical solution.
“We need to balance our books and become a much smaller organisation, which allows us to be more efficient and deliver priority services that support our residents, communities and boroughs.”