The Government has announced it is “minded to” appoint commissioners to oversee the running of Croydon Council, citing its long-standing financial problems and pressure on local services.
This follows the council’s assurances that it had stabilised its finances following its last bankruptcy in 2022.
The proposed takeover has drawn a vocal objection from Croydon’s Tory Mayor Jason Perry, who has called it a “naked political attack” from the Labour government. He added that the government was exhibiting double standards and that he had done everything he could to fix the borough’s finances.
In a stark assessment of Croydon’s ongoing financial crisis, Secretary of State for Local Government Jim McMahon signalled the need for a “short and sharp reset” to get the troubled council back on track. In a written statement published today, he said: “Failing to change course would condemn Croydon’s residents to a worsening position without an exit strategy.”
If appointed, commissioners would be tasked with implementing a stabilisation plan, overseeing spending cuts and structural reforms that McMahon believes the council has so far struggled to deliver. The intervention, expected to last until July 2027, would be reviewed after 12 months, but officials insist this is the only way to drive real change at the pace Croydon now desperately needs.
While he acknowledged some progress, he noted that Croydon remains one of the most financially troubled councils in the country, with a debt of £1.4 billion. McMahon added: “The proposal to intervene is not taken lightly but is designed to strengthen and accelerate improvement to ensure the council delivers for its residents.”
Croydon Council was previously overseen by the government-appointed Improvement and Assurance Panel (IAP), which aimed to guide the local authority into stability following years of financial turmoil. The decision came after the council’s three successive section 114 bankruptcies.
This period has seen the council ‘streamline’ its services in an effort to address its debt burden. The council has raised £230m in capital receipts and has made £130m in three tranches of asset sales.
However, for residents, this ‘streamlining’ has seen cuts proposed to library services, lollipop patrols and the council’s dedicated Youth Engagement Team.
Credit: Croydon Labour
Despite four years of oversight under the IAP and the council’s plans for an “exit strategy”, Croydon continues to face financial difficulties.
The severity of its situation was highlighted when the government handed Croydon £136m of extra financial support (EFS) in February of this year. The council has now received a total of £553 million in EFS since 2021.
In an official council statement Mayor Perry said: “If at any time the panel or Government felt that there was any action the council should be taking, and was not, they had the power to instruct us. They never did.
“Surely that means we are doing everything possible, and they agree with our actions? We have already made very difficult decisions, and in my view, the residents of Croydon have felt enough pain.
“Despite all the improvements that have been delivered by the council and its staff, it appears the Government wants to centralise control into the hands of commissioners.”
However, Mayor Perry went further in a statement shared by Croydon’s Conservatives. In that he accused the Labour government of launching a “naked political attack”.
He said: “When other councils ran into difficulty, they received direct support from the Labour Government. Just this year, Birmingham was handed £31 million in so-called ‘recovery grants’. Enfield, Hackney, Lambeth, Lewisham, and ten other London Boroughs (nearly all run by Labour, none run by the Conservatives) all received millions of pounds as part of the same grant. Croydon did not receive a penny.
“This double standard is as unfair as it is unjust. We are doing the hard work locally, and we have been honest about the road ahead. It is wrong that residents here should now face even more pain because of mistakes Labour politicians made, whilst other boroughs are bailed out.”
Reacting to the news, Labour candidate for Croydon Mayor, Rowenna Davis, told the LDRS: “This is a sad day for Croydon and a damning indictment of the Conservatives’ mismanagement of the council’s budget.”
She added: “Jason Perry came to power on a promise to fix Croydon Council’s finances. But despite a £136 million bailout, and council tax hiked by 27% on his watch, the council’s budgetary position is now so serious that the Government have been forced to step in. Once again, the people of Croydon are paying the price for the failure of politicians who don’t have our community’s interests at heart.
“At every stage, Croydon Council’s Mayor Jason Perry has made the wrong choices. An administration that wastes over £6 million on consultants while cutting lollipop school crossing patrols is not an administration that puts people first.
“Croydon needs a fresh start with a Mayor who will go through our finances line-by-line, root out waste, and engage fully with central Government to get a grip on our budget once and for all.”
The Government is inviting representations from the council and any other parties on the proposed intervention by Wednesday, June 25. Croydon Council says it is now reviewing all available options and will submit a formal response to the Government in due course.
