Croydon council faces £62m shortfall due to coronavirus crisis

By Tara O’Connor, Local Democracy Reporter

It will take up to two years for Croydon council to recover from the financial crisis brought on by the coronavirus pandemic.

In May, an independently chaired Finance Review Panel was set up by Croydon council to make decisions on immediate measures to save money.

The authority is currently facing a £62 million shortfall – this was brought down from £65 million with another injection of cash from central government.

Duncan Whitfield is the strategic director of finance at Southwark council and now chairs Croydon’s finance review panel.

He told a cabinet meeting last week: “There is an enormous amount of work going on.

“They are putting all their skills out of the drawer to take the council to a better place.

“This is necessary because this is a very particular set of circumstances.

“Croydon has always been on the edge and has stretched financially its resources as far as it can. But now with Covid hitting it is a very, very difficult time.

“The council will get through this but it will need some very difficult decisions to be made in the next few months.

“Further funding is needed for authorities across the country. We will be left with our share of the burden in London.

“While we can hope for the best, we do need to plan for the worst.”

Financial problems facing the council have been accelerated by the Covid-19 pandemic, which has seen income reduced and extra money having to be paid out.

In a bid to save money a 45-day consultation process was on July 6 launched on potential redundancies in Croydon, which could see hundreds of employees lose their jobs.

But the council was criticised by leader of the opposition Councillor Tim Pollard for not having a good back up of reserves – at the end of the financial year 2019/20 the council’s reserves were around just £12 million.

It is once a council’s reserves are used up that it faces a serious risk of bankruptcy.

Cllr Pollard said: “Part of the problem is that nothing is ever your fault. Going into the Covid crisis, as you’ve alluded to tonight, the council was in one of the weakest positions in terms of its reserves.”

Pictured top: Croydon Town Hall

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