Government commissioners are submitted to run Croydon Council after a report discovered that her finances “quickly deteriorate” and it was on its way to an effective bankruptcy for the fourth time in recent years.
Jim McMahon, the Minister of Local Government, said he would send commissioners to lead the council until July 2027 and describes the local authority as “one of the most financially distracting councils in the country”.
“The extent of the financial problems that Croydon is confronted with, the failure of the council to respond adequately to these difficulties, and the required insurance means that a short and sharp reset, with rapid action, is required to move the dial about the recovery of the council,” he said in A ministerial statement On Thursday.
The executive mayor of the council, Jason Perry, said that the government and the external panel that has been watching the council since 2020 had not told him before that the council would take more action.
“That certainly means that we do everything possible, and they agree with our actions?” he said. “We have already made very difficult decisions and in my opinion the residents of Croydon have felt enough pain.
“Despite all the improvements made by the council and its staff, the government seems to centralize control in the hands of commissioners.”
McMahon said that the last report of the panel had determined that the “deteriorating financial position, which is not grabbed and adequately tackled by the council, reached a financial crisis”.
The Council increasingly relied on the support of the government to balance its budget, its operating costs remained “unreasonably high” and its debts were expected to rise to more than £ 1.9 billion in 2029, McMahon said.
The debts of the council are £ 1.4 billion and since 2021 has received around £ 553 million in exceptional financial support from the government.
Perry said that the council had saved £ 167 million in the last four years and had sold £ 130 million in assets, with plans to sell another £ 68 million this year.
Croydon Council has declared an effective bankruptcy three times since 2020, the most recently in 2022 when the situation was blamed for “unprecedented financial mismanagement, poisonous bad debts and a lack of governance and transparency”. It increased the tax load shortly thereafter by 15%.
The largest town of London, with nearly 400,000 inhabitants, was only the second for Birmingham for the amount of exceptional financial support it received this year £ 136 million for 2025-26, awarded an increase of £ 50 million to the council in 2024-25.
The last announcement suggests that Croydon Birmingham could follow with a series of brutal budget reductions and tax increases from the council. Perry said he would not support cuts that would “decimate local services” or further tax increases above the 5% limit per year.
Counselors have criticized the government because they did not use Wednesday’s expenditure review to tackle the gap in local public finances.
Tim Oliver, the chairman of the County Councils Network, said that the amounts have announced: “are a good shortage of filling the projected £ 2.2 billion financing gorge with which County and Unity Councils will be confronted next year, and therefore further cuts will be difficult to avoid.”
Louise Gittins, the chairman of the Local Government Association, said that many authorities should increase tax taxes to try to protect the services, but still have to make further cuts.
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