Croydon Council has formally submitted a request to the government for a capitalisation direction to support the borough’s plans to become more financially sustainable.
The leader of the council, Councillor Hamida Ali, has requested the loan from the Ministry for Housing, Communities and Local Government (MHCLG) so Croydon can balance its budget by the end of this financial year and cover future deficits.
The council has requested a capitalisation direction of £150m – £70m of this is to cover the current financial year deficit, and an additional £80m to cover the period from April 2021 to March 2024.
The council has made the request to MHCLG to resolve the council’s second section 114 notice, which was issued on 2 December after the borough’s section 151 officer ruled it would not meet its legal duty to balance its budget for the financial year 2020-21. After the first section 114 was issued in November, the council had already imposed restrictions on all new, non-essential spending. Essential spending that continues includes protecting vulnerable children and adults, keeping the borough’s streets clean and safe, and Croydon’s ongoing pandemic response.
The submission to MHCLG sets out the council’s current financial position, its three-year forecasts and details of the Croydon Renewal Improvement Plan. This plan includes proposed savings subject to a current public consultation, as well as the borough’s new priorities, performance management systems, monitoring and ways of working following over 400 recommendations including from external auditors and MHCLG’s non-statutory rapid review panel. The council is also consulting on an externally and independently chaired Croydon Renewal Improvement Board, subject to MHCLG’s requirements.
For more information, visit the agenda item and appendix discussed at the cabinet meeting held on Monday evening.
“We are clear about the scale of our serious financial situation but we also know what improvements we need to make to put things right in the months and years to come. We’re asking MHCLG for a loan that will support our plans to live within our means while we continue vital services, particularly supporting and protecting vulnerable residents, keeping people safe and reducing inequality.
“Our Croydon Renewal Improvement Plan sets out how we will transform the way the council is run, keep delivering the services people need and make sure our residents and staff remain at the heart of everything we do. We are asking for this government loan so that we can achieve the change we want to see and meet our legal requirement to balance this year’s budget.”
Councillor Hamida Ali, leader of the council