Croydon council have issued a second Section 114 notice and have said it will continue to do so every 21 days until the budget is balanced, which can only be achieved through Government funding.
In this week’s extraordinary meeting, the council heard that as the 21 day period draws to a close it is still not able to balance its budgets and therefore another Section 114 notice, that declares the council effectively bankrupt, will be issued. Director of Finance Lisa Taylor told the council: “If the budget cannot be balanced in 21 days times… I will have no option but to issue another Section 114 notice… until we balance the budget.”
She said they are currently working with Ministry of Housing, Communities and Local Government) to secure a Capitalisation Direction and are “talking closely with the MHCLG to move the process through as quickly as we can.”
Council leader Hamida Ali said that they were expecting to hear from the Secretary of State Robert Jenrick soon about when they will receive such funding, but they “can’t place a timeline on it.”
Securing a Capitalisation Direction from the Government would mean that the council would receive a lump sum of money that can used to bridge the deficit. The council will have to prove that it can manage the budget in the future in order to receive the loan.
Councillor Jason Cummings, finance spokesperson for Croydon Conservatives, criticised the administration, and said: “The issuing of Section 114 is thankfully very rare, but the issuing of multiple section 114 notices is essentially unprecedented.”
“The help, if it comes, will result in even more borrowing and interest payments that will negatively affect service provision for years to come.”
Opposition Conservative councillors were united in demanding an apology from the Labour run council regarding their financial decision making. Councillor Helen Pollard called for the council to apologise to residents “who will be negatively affected by [their] financial incompetence now that [they have] squandered the councils funds on ill judged disastrous property speculation.”
But leader Ali criticised council members for working against each other rather than collectively. She said the Tory councillors had “decided to step back rather than taking part”, and had criticised the Labour administration for both their spending and their attempts to save, saying that they “can’t hold both positions at the same time.”
She pointed out that the external auditors recommended the council recognise collective responsibilities and they need to work together to tackle the financial crises, and that the council will continue to “live within [their] means” and deliver services to those who need them most.
Read our recent coverage on Croydon’s financial crisis:
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