Croydon halts new non-essential spending

Croydon Council has issued a section 114 notice as it struggles to get its finances back under control.

The notice will mean all new non-essential spending at the London borough will be stopped while an emergency budget is drawn up to find further savings in this and the coming years.

In a letter to councillors, finance director Lisa Taylor has outlined the serious issues facing the council including a potential budget shortfall in the current financial year of around £66m.

The section 114 notice comes as the council prepares to publish its action plan to tackle a range of governance and financial issues raised in last month’s public interest report, which will be debated by councillors on 19 November.

The report found the council’s approach to borrowing and investments had exposed the ‘council and future generations of taxpayers to significant financial risk’.

It also revealed London borough has borrowed £545m in the last three years to invest in local authority-owned companies and buy investment properties.

On 29 October, the government ordered a rapid review into Croydon Council, following publication of the report.

‘We need to be honest about the fact that, for a number of reasons, the council is on track to spend more than we have,’ said council leader, Cllr Hamida Ali.

‘The Covid-19 crisis and a decade of austerity have had a major impact on our finances but it’s clear the council has also made mistakes, and I am committed to fixing that.

‘We know that we cannot do this alone and we want to work in partnership with everyone with a stake in Croydon’s success. That includes seeking financial support from the government and today’s section 114 notice is a part of making that case,’ added Cllr Ali.

‘While we continue to work hard to find savings, we must focus our spending on essential services and protecting our vulnerable residents.’

Responding to the news, the chief executive of CIPFA, Rob Whiteman said: ‘Croydon’s section 151 officer has done entirely the right thing because it’s better to bring these issues out to be dealt with. We fully support the decision.

‘There are some councils which would be resilient but for Covid-19, but that’s not the case for Croydon. The public interest report shows there are far more fundamental underlying problems at Croydon and therefore the section 114 notice is now being issued.’

Photo Credit – Stux (Pixabay)