Croydon has set out plans to tackle its financial challenges by overhauling the way the Council is run, by modernising, improving and protecting public services for residents.

The Council is launching this action as, like local authorities across the country, it faces seismic funding pressures due to spiralling demand and surging costs.

In the past 12 months, the increased need for homelessness help and social care, combined with the rising cost of children’s placements and accommodation, has caused the Council’s financial position to deteriorate significantly. With nearly 400,000 residents, Croydon is London’s largest borough and is experiencing the third highest number of people seeking homeless help in the UK.

As a result of these pressures, the Council is now predicting a £98m budget gap for 2025/26. This is despite the Council’s robust financial management, and significant progress and improvement – which has been highlighted by a range of external partners. These include Croydon’s independent Improvement and Assurance Panel (IAP), central Government, the Local Government Association (LGA), the Council’s external auditors and Ofsted.

Croydon has achieved balanced budgets for the past two years, with Government support for debt. And the Council has delivered on average more than £41m savings per year since 2021 – significantly more than other London boroughs and statistical neighbours.

On top of this, Croydon Council has a £1.4bn general fund debt that will cost £71m next year. As in previous years, the Council will be seeking £38m in Government support for this burden.

This means that Croydon will be requesting a total of £136m exceptional financial support from the Government for 2025/26. It is expected that this will be in the form of capitalisation directions.

In line with the Executive Mayor’s pledge not to raise Council Tax above the cap, Croydon is proposing an increase of 2.99% and a 2% increase in the adult social care precept levy.

Whilst the Council will need Government support, it is acting locally to meet its financial challenges, but not by cutting frontline services or raising Council Tax above the referendum cap.

Instead, Croydon has launched new plans to change the way the Council is run, becoming more cost effective and efficient.

Changes include using new digital tools to improve processes for staff, making contacting the Council seamless and hassle-free, improving customer care and becoming more efficient. The proposals also include working more closely with charities and partners, including through commissioned services, focusing on preventative action to avoid people reaching crisis point and providing services through community hubs.

These changes to the Council are backed by new plans for Croydon town centre, to drive forward regeneration, maximise investment in the borough and promote its growth.

Together these plans aim to reshape Croydon, respond to the challenges the Council is facing, improve public services and reframe the Council’s relationship with residents.

The Council has developed its plans following hundreds of conversations with residents, businesses, partners and staff. It has worked with Boston Consulting Group on these changes – one of three strategic partners who are working with the Council, along with Newton and Impower.

If agreed at Cabinet, the Council will deliver these changes over the next four years. By 2028-29 they will save £27.7m per year, whilst focusing on better outcomes for local people.

But, this local action alone will not be enough to make the Council financially sustainable. The Council remains in conversation with the Government regarding a long-term solution to its debt that doesn’t involve capitalisation directions, which just enable the Council to borrow more to meet day to day spending. Like other local authorities, Croydon awaits national action on the unsustainable demand and cost for local services in the Government’s comprehensive spending review.

“Despite the huge strides we have made in improving our Council, we are facing significant financial challenges, owing to the spiralling demand and surging costs that are impacting all local authorities across the country and in London in particular.

“The scale of the challenge means that savings are not enough, and I am not prepared to pass the cost to local people. We must act and do things differently.

“To protect public services, now and in the future, we must modernise our Council and become more cost effective and efficient. This will mean better outcomes for residents, a better experience for all our customers and closer working with all our partners.

“In addition, we need Government action on the demand and costs that are impacting all councils. They have made clear they plan to address these. I am working with them to respond to these issues locally, protect public services and secure a sustainable future for Croydon.”

Jason Perry, Executive Mayor of Croydon

Croydon’s budget proposals for 2025/26 are published on the council website with the Cabinet papers for 12 February. The Future Croydon report includes the Target Operating Model for the Council and a place vision for Croydon town centre. If approved at Cabinet, the proposals will go to Full Council for a decision. Read the papers here.