A council in South London is seeking a £136 million financial rescue from the government after disclosing a £35 million overspend this fiscal year.
Croydon Council is projecting a £98 million budget deficit for the upcoming financial year and is finding it difficult to stabilize its finances, even after implementing cuts to public services and increasing council tax.
The Conservative-led administration attributes its deteriorating financial health to an uptick in homelessness, heightened demand for social care, and soaring costs associated with children’s placements.
The BBC has reached out to the Ministry of Housing, Communities, and Local Government (MHCLG) for a statement. This week, the ministry confirmed that £69 billion in funding has been allocated for local councils across England.
Croydon Council is requesting assistance in the form of capitalization directions, which allow local governments to treat revenue expenditures as capital investments.
Proposals released ahead of a budget meeting scheduled for Wednesday also indicate an expected 2.99% increase in council tax and a 2% rise in the adult social care levy, consistent with the government’s overall limit of 4.99% for boroughs in London.
As a result, by April 2025, council tax in Croydon will have risen by over 26% since Mayor Jason Perry’s election in 2022.
In 2020, Croydon Council became the first London borough in two decades to effectively declare bankruptcy, and it subsequently marked its third bankruptcy declaration in November 2022.
When elected in 2023, Perry vowed to tackle the borough’s substantial £1.4 billion debt.
Recent austerity measures include the closure of four libraries in November and a reorganization of the Youth Engagement Team.
Stuart King, leader of the Labour group in Croydon, remarked, “Residents are contributing more but receiving less in services.”
He added, “Under Mayor Perry, the finances have deteriorated significantly, and the residents should not have to bear the burden of his mismanagement.”
In defense of his strategy, Perry asserted the need for the council to modernize to improve efficiency.
He outlined plans to revamp council operations, including the implementation of digital tools and collaborations with charities to enhance service delivery.
While these initiatives aim to save £27.7 million annually by 2028, they will not be sufficient to ensure Croydon’s financial viability.
Perry stated: “Despite the progress we have made in enhancing our council, we are encountering significant financial hurdles due to escalating demand and rising costs that affect all local authorities nationwide, particularly in London.
“The magnitude of the challenge necessitates more than just savings, and I refuse to shift the financial burden onto local residents.
“We must innovate and adopt new approaches. To safeguard public services both now and in the future, we need to modernize our council to become more efficient and cost-effective.”
The government noted that its final financial settlement, revealed on Monday, provided a 6.8% increase in cash terms to councils’ Core Spending Power compared to the 2024-25 budget.
“Given the rising demand and increasing operational costs, this funding serves as a crucial lifeline, ensuring that no council experiences a reduction in its Core Spending Power,” the MHCLG stated.
The post Croydon Council Seeks £136 Million Rescue Amidst Rising Financial Turmoil and Service Cuts first appeared on London.
Author : London News
Publish date : 2025-02-20 08:03:00
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