CROYDON IN CRISIS: As government bails out cash-strapped council with record amount as part of £1.5bn provided across 30 local authorities in England, the borough’s elected Mayor was out on the piss.
PLUS: There’s £40m provided to Lambeth to sort out its housing mess
The Ministry of Housing, Communities and Local Government made the announcement last night, including granting cash-strapped Croydon’s application for its now-annual capitalisation direction, this time for £136million – the most that the south London council has ever requested and almost £50million more than any amount allocated to six other boroughs in the capital.
Lambeth is also to receive a £40million bail-out, but this is specifically to manage “financial pressures” within its Housing Revenue Account, a consequence of years of mismanagement of housing in the borough which began when Steve Reed OBE was council leader in Brixton.
Lambeth is the only council to receive such allocated funding.
Across the country, the government has allocated a total of £1.5billion to aid financially stricken councils on the brink of bankruptcy.
Out on the piss: Mayor Jason Perry was hard at work last night playing games in Boozepark
The announcement comes ahead of next week’s Town Hall budget and Council Tax-setting meeting in Croydon.
As the MHCLG was making its announcement, Croydon’s Mayor, Jason “Fix the Finances” Perry, was out in Boozepark, playing shuffleboard. One of his lackeys will no doubt update his register of interests to reflect the Mayor having received a pint of light and bitter, which they will value at three shillings and six.
For 2025-2026, Croydon and other London councils receive:
- Croydon: £136m
- Havering: £88m
- Barnet: £55.7m
- Newham: £51.2m
- Lambeth: £40m
- Haringey: £37m
- Enfield: £10m
The funds are “to ensure the delivery of public services, protect community assets and promote economic stability”, the ministry said.
“Our long-term commitment is to fix the foundations of local government, including reforming the outdated and inefficient funding model by bringing forward the first multi-year settlements in a decade, creating an updated and fit-for-purpose assessment of need and reforming the local audit system to provide transparency, security and stability to council finances,” the MHCLG statement said.
“However, there are councils in financial difficulty in need of immediate help, and a record number of councils have reached out to the government asking for Exceptional Financial Support to help them balance their budgets this year.”
With the latest government bail-out, that brings the total handed to Croydon in exceptional financial support to £308.4million (including a backdated £9.4million for 2019-2020).
Of those multi-million sums, £249million has been requested while Perry has been Croydon’s executive Mayor – a period when, subject to approval in the Town Hall Chamber next week, Council Tax has been hiked by 27%.
Of the other two-dozen councils across England receiving exceptional financial support, only the City of Birmingham, with £180million, is receiving more than Croydon.
Will Jim fix it?: Jim McMahon, Labour’s local government minister
Jim McMahon, the local government minister, said, “We are under no illusion of the state of council finances and have been clear from the outset on our commitment to get councils back on their feet.
“Be assured we will offer a relationship of partnership – not punishment – in our joint mission to improve public services for communities and create economic stability.”
Included in last night’s announcement was the news that, unlike the previous Conservative government, councils would no longer be charged an additional 1% interest on their capitalisation loans, as Croydon has experienced since 2021.
Three councils – Birmingham, Bradford, and Windsor and Maidenhead – will each be allowed to issue cap-busting Council Tax bill increases of up to 10%. Croydon will be staying within the cap for a 4.99% increase for 2025-2026.
Croydon is among six councils in the Section 114 club, in special measures after declaring effective bankruptcy – the others being Birmingham, Nottingham, Slough, Thurrock and Woking.
The allocation of the settlements cuts right across the country, and comes regardless of the political control of the councils. Councils granted special borrowing packages for the first time include Newham (Labour), Shropshire (Conservative), Swindon (Labour), Trafford (Labour), West Berkshire (Liberal Democrat), Wirral (No overall control), Enfield (Labour), Halton (Labour), Barnet (Labour), Solihull (Conservative), Worcestershire (Conservative) and Worthing (Labour).
The exceptional financial support packages enable councils to take out capital loans to fund revenue spending, on the basis they will pay down the debt in future by disposing of assets and cutting back on frontline services.
By Ken Pyne, from the latest Private Eye
But in another change from Tory policy, the government has imposed conditions preventing the councils from selling what it calls “community and heritage assets”, to discourage desperate councils (eg Croydon under Perry) from conducting fire sales of parks, libraries and artworks.
The increase in the number of exceptional support packages year-on-year – up by 50% since 2024 – reflects rapidly deteriorating municipal balance sheets at councils all over England.
And while welcomed as a short-term fix, the bail-outs only load additional debt on to councils. Croydon’s £1.4billion toxic debt will see the council spending £71million – about 16% of its total budget – just on loan repayments and interest in 2025-2026.
Read more: Council Tax hits £2,500 per year as debts continue to mount
Read more: ‘Mayor and CEO are respected and provide strong leadership’
Read more: Mayor Perry busts his unbalanced budget with £42m overspend
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