Croydon Council gets £120 million bailout

Croydon Town Hall Pic: Dr Neil Clifton

Croydon Council has been granted £120 million by the government, three months after the council went bankrupt.

The sum, which was announced in the first week of March, will be split into £70 million for the 2020/21 financial year and £50 million for 2021/22.

Croydon Council issued a Section 114 notice declaring itself bankrupt on November 11, 2020.

The projected overspend is estimated at £96.5 million. The council cannot spend money on services it is not legally required to provide such as parks and community centres.

Croydon Council leader Hamida Ali said: “This means we can now put forward a balanced budget and it gives us a solid foundation to focus on putting those plans for sustainable finances into practice over the next 12 months.

“We have a lot of work to do and our finances remain critical over the medium term, but we have already shown in the way we have responded to the government and external reviews that we are serious about tackling our financial situation, improving how Croydon is run and providing good value services for our residents.”

Conditional bailout

The government’s bailout offer is conditional. Croydon Council has to deliver its renewal plans and provide regular progress updates to the government-appointed Improvement and Assurance Panel.

The panel is composed of local government and finance experts; they support and challenge Croydon’s progress and make regular reports to the Secretary of State.

Croydon Council’s Renewal Plan is a major programme mapping out suggested savings, strengthening governance and financial practices.

On March 10, 2021, former leader of Croydon Council, Tony Newman, who resigned in October 2020, and his colleague in the local Labour Party, Simon Hall, both announced that they had resigned as councillors.

Newman said in a tweet after four months of silence: “Today I resign as New Addington Cllr after 16 yrs. It was an honour to serve always in good faith. On advice from leading counsel I view complaints against me from a flawed factually inaccurate draft report as baseless. But scapegoating & threat to family made situation untenable.”

In his statement, Hall claimed to have been threatened and made a scapegoat for the council declaring itself effectively bankrupt.

Hall had been the Labour Town Hall cabinet member for finance from 2014 until October 2020. The council had overspent by £66 million.

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