Bankrupt Croydon Council still waiting to hear on bail out from government

The authority needs a response in the coming week as the legal deadline for council tax and budget setting approaches on March 11.

A council budget meeting is scheduled for March 1.

In November 2022, the council admitted it couldn’t balance its budget for 2023/24 and was forced to issue a Section 114 notice, declaring effective bankruptcy for the third time in two years.

At the time, it estimated it would need to reduce spending by £130m in the next financial year to balance the budget, a legal requirement for local authorities.

Since then, it has been in discussion with the government to come up with a plan to bring the council back on track.

The authority was given a capitalisation direction of £120 million in March 2021 after it issued its first bankruptcy notice in 2020.

But the council said another loan like this wouldn’t cut it this time.

The council said this would add to its existing £1.5 billion debt which takes £47 million a year to service.

It has instead asked the government to write off some of its debts.

Mayor of Croydon, Jason Perry, said the council is still in discussion with the government on what the solution will be.

He said: “Discussions with the government are ongoing and I think things will become clearer in the next few weeks.”

On November 30, Tony McArdle, chair of Croydon’s improvement and assurance panel, which reports back to the Department for Levelling Up, spoke at a council meeting.

He said: “I think it will be some weeks before we know how it is going to work and that is a difficult time for this council.

“You, your residents and your staff will have to be concerned about how this is going to pan out.

“Whatever the solution may be, you will have to consider the reconfiguration of your services to something that will be a minimal range of provision.

“Some of the discussions we will be having with DLUP is how we make sure risk is not unduly increased with the need to reduce services further.”