Cash-strapped council sets budget with help of £25m Government loan

By Tara O’Connor, Local Democracy Reporter

Croydon has been able to set its budget with the help of a £25 million loan from the Government.

Council leader Hamida Ali said the authority received “hugely important” confirmation of the loan.

It is the latest in a four-year loan arrangement agreed in the wake of the council’s bankruptcy in 2020.

Speaking at a cabinet meeting on Monday of last week, Councillor Ali said it “reinforces the government’s confidence in what we are doing”.

But a letter from MP Kemi Badenoch, Minister of State for Equalities and Levelling Up Communities, asked for the council to give the department an update on a £73 million accounting issue by the end of the month.

Croydon council could be forced to pay £73 million next year due to a complex arrangement between the council and Croydon Affordable Homes, which may have led to cash being classified incorrectly.

The budget warns the council could be at risk of issuing another section 114 notice, declaring effective bankruptcy, if this issue is not sorted out.

Ms Badenoch’s letter read: “I am aware that there is an issue relating to the historic accounting treatment of transactions between the Council and Croydon Affordable Homes.

“I understand that this issue may result in a further significant request for capitalisation to enable the council to close the 2019/20 accounts.

“As such, I would like you to provide an update on this matter and a timetable for its resolution by the end of March 2022.”

Pictured top: Croydon Town Hall (Picture: Google Street View)