Croydon Council has today issued a section 114 notice due to the severe ongoing financial challenges facing the authority.
This significant step will mean all new non-essential spending 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 outlined the serious issues facing the council including a potential budget shortfall in the current financial year of around £66m.
Issuing the notice is recognition that despite all efforts to do so the council cannot now balance its budget this year, which it is required to do by law.
The council had previously acknowledged its worsening financial situation, and has set in train a number of improvement and savings programmes to help put it back on a stable financial footing.
It is also in talks with the government about the financial support necessary to balance the budget and transform the council.
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 the recent Report in the Public Interest which will be debated by councillors on 19 November.
“When I became leader of Croydon three weeks ago I promised a new approach which tackles the problems the council is facing head-on.
“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.
“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.
“While we continue to work hard to find savings, we must focus our spending on essential services and protecting our vulnerable residents.
“We’re not going to fix these problems overnight and there will be difficult decisions ahead but I want to reassure local people that the council will still be here to support you.
“My priority is rebuilding a financially sustainable organisation, which provides the value for money and high-quality services that residents deserve.”
Councillor Hamida Ali, leader of the council
Notes to Editors
Councils are required by law to have balanced budgets. If a council cannot find a way to finance their expenditure, a section 114 can be issued. The order bans all new expenditure, with the exception of safeguarding vulnerable people and statutory services.