roydon Council has issued its third bankruptcy notice in just two years, with the mayor blaming Labour’s “toxic financial mistakes” .
The council introduced on Tuesday it will not have the ability to steadiness its books subsequent year with out additional help from the Government, and has issued one more Section 114 Notice.
Conservative Mayor Jason Perry is blaming debt ranges totalling £1.6 billion (of which £1.3 billion is General Fund debt) on “Croydon Labour’s toxic financial mistakes”.
He said the historic debt means “Corydon is trapped in a vicious cycle”.
“Even with Government support, the coming years will be incredibly financially challenging for Croydon Council. We must balance our books and become a much smaller organisation.”
He has written to Secretary of State Michael Gove setting out the necessity for additional help.
Following his election in May, Mr Perry set out to uncover the monetary scenario of the council.
Currently the council should pay £47 million from its budget to service debt before it might spend money on services, he said in a statement on Tuesday.
“Croydon is doing all it can to support its own recovery through its savings and transformation programmes, which have already delivered over £90 million in savings and £50 million in asset sales over the past two years, with further proposals for £44 million in savings in 2023/24 and around £100 million in proposed asset disposals in the coming years.
“But it will not be enough to meet the council’s costs and ongoing toxic debt burden. The council is estimating that it would need to reduce spending by £130 million in the next financial year which would leave the organisation financially and operationally unsustainable.”
In a video posted to Twitter, Councillor Jason Cummings, Cabinet Member for Finance, said the bankruptcy was a results of “legacy issues from Labour bankrupting the borough”.
“This is happening because on our current projection it will be impossible to set a balanced budget next year with the resources that Croydon Council has.
“We knew it was bad, but Labour were hiding just how bad it was.”
The council will talk about its medium time period monetary technique at Cabinet on November 30, which incorporates budget financial savings and asset gross sales. A public engagement will then start in December.
Mr Perry is the borough’s first elected Conservative mayor. Residents in the borough voted to switch from the earlier system of a leader and a cabinet, to one with an elected mayor.
The position holds extra power than a traditional council leader as a result of they will approve main plans alone with out help from other elected councillors.
He took office shortly after the council had issued a balanced budget for the year forward, which was signed off by a government-appointed enchancment panel.
Croydon Council was pressured to impose a ban on non-essential spending last year after it successfully declared itself bankrupt in November 2020.
The council, which has been under Labour management since 2014, said it was unable to meet its legal obligation to steadiness its books.
It received a £120 million bailout from the Government in 2021. But its budget report this year warned it nonetheless confronted an unresolved shortfall of £73 million that was being investigated by auditors Grant Thornton.
Leader of the Opposition Councillor Stuart King has been approached for remark.