There was a time, not so long ago, when Croydon was unique, the only local authority rattling its begging bowl for a government bail-out.
It’s unique no more, as a report by the Local Government Chronicle says that at least 100 councils across the country – 1-in-5 local authorities – are planning to apply to Whitehall for exceptional financial support for 2026-2027.
Feeling the heat: Jason Perry’s failed with the council finances, and much else
Of course, Croydon is right there in among them, just a year after failed Mayor Jason Perry needed a record £136million of EFS – exceptional financial support.
The Town Hall begging bowl is already being dusted off, even with a maximum Council Tax rise planned of 5%.
That increase next April will bring the overall increase in Council Tax in Croydon to 33% since Tory Perry was elected Mayor in 2022.
The precariousness of the position of so many councils makes the financial settlements from central government, expected to be announced by Steve Reed’s Ministry of Housing, Communities and Local Government before Christmas, critically important for every local authority in the country.
The consequences of Mayor Perry’s broken election promise to “fix the finances”, and his need for EFS in every year of his mayoralty, have taken their toll. In July, the government sent in Commissioners because Croydon Council could no longer be trusted to manage its own affairs. Since then, chief executive Katherine Kerswell has quit and her finance director, Jane West, has been eased towards the exit of Fisher’s Folly, too.
Doomsday chart: the LGC is predicting that the number of councils needing exceptional financial support could triple in 2026-2027
The Local Government Chronicle’s doomsday estimate is based on their own tracking of councils’ published statements of Council Tax increases, plus an MHCLG tender to appoint external consultants to carry out financial assurance reviews of authorities identified as “being at financial risk”.
According to the magazine, “the government expects to require 37 ‘rapid reviews’ for the first half of the year, with the same number anticipated for the remainder of the year”. That is 74 throughout the year. The implication is that there may well be more.
Rapid reviews are used to analyse a council’s request for exceptional financial support. They usually take between two and three weeks.
The Chronicle has surveyed a sample of 45 councils. Ten of those, including Croydon, have said that they intend to seek EFS. The other struggling councils are East Sussex County Council, Hampshire CC, Norfolk CC, Haringey, North Somerset, Warrington, Worcestershire CC, Shropshire CC and Worthing.
“The findings align with projections from senior sector figures, who have previously told LGC that up to 100 local authorities could apply for EFS next year,” the magazine reports.
Council Tax increases are capped at 3%, with an added 2% for those with social care responsibilities. Without special permission from the government – which Jason Perry requested in 2023 when he hiked Croydon’s Council Tax by 15% – councils are supposed to hold a local referendum to get voters’ permission for any increase above 5% (imagine the referendum question: “Do you agree that your Council Tax should increase by, say, 15%?”).
The Local Government Chronicle found eight councils out of their 45 sample who are considering requesting permission from the government to impose an increase above the referendum limit. Final decisions will be taken by full council when budgets are agreed in the new year.
The Local Government Chronicle’s survey included six of the 12 councils now led by Nigel Farage’s Reform Ltd. All six surveyed are planning a maximum Council Tax rise for next year.
Unique: Katherine Kerswell is the only council CEO to have issued three S114 notices
London Councils. the umbrella organisation of 32 boroughs and the City of London, has warned that 17 boroughs in the capital may need to apply for EFS by 2028-2029.
The Local Government Chronicle quoted an MHCLG spokesperson as saying: “We recognise the pressures local authorities are facing and will continue to support councils to deliver the vital public services that people need.”
Croydon does remain unique among local authorities in one respect, however: under the leadership of former CRO Kerswell, it managed to become the only council in the country to issue three Section 114 notices, an admission of effective bankruptcy.
Read more: Let’s all send a clear message to Mayor Perry this Christmas
Read more: Finance chief leaves council three months sooner than planned
Read more: Mayor Perry busts his unbalanced budget with £42m overspend
Read more: Perry pleads poverty when he has more Council Tax than ever
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