Crisis-hit Croydon Council needs short, sharp reset minister says

A “short and sharp reset” is required for Croydon Council to recover from poor performance and high debt levels, the minister for housing, communities and local government has announced.

Jim McMahon has told the House of Commons the council’s financial position is “deteriorating rapidly” after a report highlighted concerns about its ability to improve.

McMahon said that failing to change course “would condemn Croydon’s residents to a worsening position without an exit strategy” and he was “minded to” send in commissioners to run the council.

Executive mayor of Croydon, Jason Perry, said he and the council “had done everything possible” to fix the finances “whilst protecting vital services”.

Perry added: “We have generated over £230m in capital receipts, including £130m of asset sales and have plans to sell a further £68m assets this year.

“The council also raised council tax by 10% over the cap in 2023, to help meet the panel’s demand that we close the gap in the council’s finances.”

The council had been under review by the government’s improvement and assurance panel, set up to provide external advice, challenge and expertise.

McMahon said the council’s general fund debt sits at around £1.4bn and it relies on the allocation of Exceptional Financial Support (EFS) through in-principle capitalisation directions to balance its budget.

The panel’s report has said there has been a lack of pace throughout the intervention, but the deteriorating financial position, which is not being gripped and tackled adequately by the council, is reaching a “financial crisis”.

McMahon added: “I am satisfied that the London Borough of Croydon is failing to comply with its Best Value Duty. I am therefore minded to exercise powers of direction under section 15(5) and 15(6) of the Local Government Act 1999 to implement an intervention package.”

Perry said, via a statement: “If at any time the panel or government felt that there was any action the council should be taking and was not, they had the power to instruct us. They never did.

“Surely that means we are doing everything possible, and they agree with our actions? We have already made very difficult decisions and in my view the residents of Croydon have felt enough pain.

“Despite all the improvements that have been delivered by the council and its staff, it appears the government wants to centralise control into the hands of commissioners.”

He said the council would consider all options before submitting its formal response to the government, the deadline for which is 25 June.