Croydon continues to make strong progress in fixing its finances with 2024/25 budget proposals

Croydon is proposing a 2024/25 budget that will see the council build on its strong progress in fixing its finances, while providing everyday services to London’s largest borough and investing in residents’ futures.

Published today ahead of next week’s scrutiny and cabinet meetings, the council’s medium term financial strategy (MTFS) sets out the council’s financial position, its budget plans for 2024/25 and forecast for the next four years.

In 2024/25 Croydon is proposing to spend more than £400m in providing the everyday services that matter most to its 390,000 residents, from protecting vulnerable children and adults, to collecting the bins and cleaning the streets. The proposals outlined account for the rising demand for services, such as essential social care, together with inflation.

At the same time Croydon Council is changing to become more efficient and better-run. The budget plans include investment in modernising and improving the way the council delivers services, to meet the needs of its communities now and in the future.

The medium-term financial strategy outlines how Croydon’s budget for 2024/25 and future years continues to be impacted by the legacy of past mismanagement at the council, which culminated in the financial collapse of 2020.

Since his election in May 2022, Croydon’s Executive Mayor Jason Perry has been clear that his absolute priority is fixing the council’s finances, so that Croydon can provide good services for residents while offering them value for every penny spent.

This means doing less but better, and the council’s proposals for 2024/25 include a further £31m in efficiency savings to ensure the council is living within its means. An ongoing programme of asset sales will help get the council’s finances back on track and alleviate borrowing costs.

A 2.99% council tax increase is proposed, together with the 2% for adult social care that the government expects all councils to levy, making a total increase of 4.99%. This is in line with the referendum cap the government is expected to impose for London boroughs and, despite the council’s challenges, Mayor Perry has been clear that he will not support an increase above the referendum cap next year or in future years.

The MTFS sets out how Croydon’s financial position has stabilised in the past 12 months, as the council continues to make progress in tackling its financial challenges.

This follows the ‘Opening the Books’ exercise launched by Mayor Perry in June 2022, to grip and tackle head-on the ongoing impact of historic financial and governance failures at Croydon. The legacy issues uncovered – including the council’s £1.6bn debt burden – resulted in the chief finance officer declaring the council unsustainable and issuing a Section 114 Notice last November.

Since then, the council has taken a series of tough decisions locally to get its finances back on track. Croydon is no longer in Section 114 and the government has noted Croydon’s strong progress in tackling its financial challenges under Mayor Perry’s leadership.

Despite this the borough continues to grapple with the legacy of past financial mismanagement. Next year Croydon will spend £64m of its budget on servicing debt – £320m of which is not backed by assets and therefore toxic – before it spends any money on local services.

To address this, the council has requested continued government support over the next four years, including £38m in 2024/25. The budget proposals for 2024/25 are based on receiving that in some form of extraordinary financial support from government.

However, the council has been clear that more borrowing is not a solution. Croydon will need a bespoke package of support – preferably through a £540m debt write off – if it is to become financially sustainable. The alternative of further permission from the government to borrow to fund revenue spend, through capitalisation directions that waive accountancy good practice, simply piles more debt on the council. This may be necessary in the short term but is not a long term solution.

At next week’s cabinet, Mayor Perry will be asked to approve the launch of a public engagement exercise on the budget proposals, for residents, businesses and community partners to give their views. If approved a survey will run for six weeks from 6 November.

Jason Perry

“We are making strong progress and Croydon is undoubtedly in a better place than last year, but the council is still facing real challenges.

“I promised I would fix the financial mess I inherited and get the council back on track for the sake of residents in our borough. They cannot continue to pay the price for other people’s mistakes. Unfortunately, that means making some difficult decisions in the short-term to secure Croydon’s future. I know residents are rightly angry that Croydon is in this position and as Mayor, I am doing everything in my remit to ensure that those responsible are brought to account.

“I also promised I would listen to local people and it is important that they have their say on our plans for next year. Please do get involved and share your views in our survey when it launches next month.

“I must be clear that, although I welcome the government’s confidence that Croydon can lead its own recovery, the legacy of past financial mismanagement and the council’s toxic debt burden means we cannot do it alone. Government support is critical to balance our budget next year and more borrowing is a short-term fix, not a solution. I will be continuing to make the case for our borough and working with the government to secure the right support package for Croydon.”

Jason Perry, Executive Mayor of Croydon

Read the council’s MTFS and budget papers on the council’s website.

2023-10-17T10:32:21+01:00 October 17th, 2023|Recent news|