Bankrupt Croydon council still waiting on Government bailout

By Tara O’Connor, Local Democracy Reporter

Croydon council is still under strict financial constraints as it waits to find out whether it will get a vital government bailout.

The council had to issue a Section 114 notice, declaring effective bankruptcy, as it was facing an overspend of more than £60 million for the current year.

Last month the council went to the Ministry for Housing, Communities and Local Government (MHCLG) to ask for a £150 million loan known as a Capitalisation Direction.

Without this money it will remain under a Section 114 notice, which bans all non-essential spending.

Any money spent in this time needs to be overseen directly by the council’s director of finance.

Croydon leader, Councillor Hamida Ali, said she was confident the council has done all it can to be granted the loan.

She said: “We are in regular dialogue with MHCLG. We have weekly conversations with them. And while we await a response we remain in emergency financial constraints.

“There is also a council spending control panel which meets twice daily. It is a very difficult and challenging situation.

“We have been clear that it is a capitalisation direction that will provide stability to the council budget this year and next, we have done everything that we can and made clear through our submissions all the work we are doing.

“I understand how concerning it is for residents, but it is really important that we can continue to provide services and continue to be there day in, day out.”

Even if the council receives the money from the Government, it will have to make a series of cuts including more than 100 job losses.

It could also see the closure of Purley Leisure, one of the borough’s three tips and five of the council’s 13 libraries.

Until January 24, the council is running a consultation on its plans to save money, this can be found online here: https://news.croydon.gov.uk/croydonrenewalplan/.

Pictured top: Croydon Town Hall


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