Local government minister admits that Croydon’s finances ‘are not small problems to deal with’
Questions in the House: Croydon East MP Natasha Irons spoke of the council’s ‘broken finances’
Natasha Irons, the Labour MP for Croydon East, yesterday made an 11th-hour plea to government ministers to act to salvage something from the wreckage of Croydon Council, after a decade and a half of austerity and crass mismanagement.
Irons, who was elected to parliament at last July’s General Election, was speaking in a Commons debate on local authority funding, where she and other backbench MPs from across the country made similar points about how unfair funding had seen savage cuts to local services since 2010.
Tomorrow, Chancellor of the Exchequer Rachel Reeves is due to deliver a spending review, although few in Westminster believe that she will wave a magic wand to solve the composite issues across housing, adult and children’s social care that have steadily worsened during a decade and a half of austerity.
Questioning Jim McMahon, the Minister for Local Government, Irons told the House: “Despite an increase in Council Tax of 27% since 2022…,” (it is actually 27% since 2023 under Tory Mayor Jason Perry; the previous Labour council administration increased Council Tax by 5% in 2022), “… £136million in exceptional financial support this year and brutal cuts to services, Croydon Council’s finances remain broken.
“As an outer London borough with inner London problems, Croydon has historically not received the funding it needs to cover the costs for demand-led services like temporary accommodation. So even if Croydon’s debt was wiped out, it would still need exceptional financial support.
“Will the Minister outline how councils like Croydon will get the resources they need to meet the complex challenges they face and provide the frontline services that our communities deserve?”
It was almost as if Irons, previously a Labour councillor in Merton, had briefed herself with materials from the “Fund Croydon Fairly” campaign which led the challenge to Tory Mayor Jason Perry’s 15% Council Tax hike in 2023, while her Labour councillor colleagues in Croydon abstained.
Croydon Council first declared itself effectively bankrupt in November 2020, after six years of a Labour-run council, issuing its first Section 114 Notice.
Croydon has since issued another two S114s, a worse record than any other local authority in the country. Insiders suggest that were it not for the new Labour government preferring to avoid councils issuing such public distress signals, Croydon’s fourth S114 might have been issued late last year, until the latest, record £136million bail-out was agreed in February.
“The questions that have been raised demonstrate why the fair funding review is needed, and why it has to take into account all the different factors that have an impact on whether councils can provide good public services or not,” McMahon said.
“I appreciate, understand and accept that pressures that were previously felt in inner London are now felt in outer London, and in rural areas, too.
‘Not small problems’: local government minister Jim McMahon
“My hon. Friend will know that in February we provided £136million in EFS [Extraordinary Financial Support] support for Croydon Council, and we will continue to work with it. We have met and talked about the issues a number of times, and I know that she understands that those are not small problems to deal with.”
In other answers during the debate, McMahon offered “jam tomorrow” for the dozens of distressed councils across the country, saying that in the next financial year, 2026-2027, “an improved approach will direct funding where it is needed most and provide certainty through the first multi-year settlement in over a decade”.
But with that, McMahon appeared to confirm that there would be no immediate relief offered to councils such as Croydon, which seems likely will run out of money again before the end of this financial year, despite receiving the latest multi-million government bail-out.
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