Croydon Council has set out drastic cuts in services and a rise in council tax – including a major reduction in libraries and properties – to reduce its overall estimated debt of £1.6bn after declaring bankruptcy for the third time last week.

At a cabinet meeting on Tuesday, Mayor Jason Perry said that the debt they “inherited from the previous administration” was around “£48 million worth of mistakes”. 

Perry added: “Tonight will be incredibly challenging, but I am agreeing to the recommendations of the [Financial Performance] report.”  

Jane West, Croydon council’s corporate director of resources, issued the council a Section 114 notice last Tuesday. West outlined her recommendations to the council in a financial performance report: 

“In order to balance its budget, Croydon needs to reduce its spending by £130m next financial year alone (before any council tax increase) which is simply untenable out of a net budget of some £300m.”  

A ‘Transformation Plan’ has been set out in response to West’s findings, which outline budget cuts and potential disposals of council assets. Despite the report, Councillor Jason Cummings said: “We are now predicted to balance that budget. We are forecasting a balanced year-end position with £20 million in corporate adjustments.”  

However, Perry said: “We need further support from the Government, yet even with the Government support, this will be hard financially… Nobody quite knew how bad things had become.” 

Councillor Jason Cummings said that council tax could rise by 5% and possibly further as “there is simply no other choice.”

Labour Councillor Rowena Davis asked “given that Section 114 restricts all non-urgent spending, will the Mayor be reviewing the priorities of his business plan?” She also asked, “Are you satisfied with the current Transformation Plan, many of the projects appear piecemeal rather than truly transformational?”

Perry explained that there will be more additions to the plan, meaning possible further cuts and budget reshuffles. He said: “It is appropriate. Some of it is challenging, some of it is less changeling, and more transformation projects will be coming forward in the next few months.”

The Asset Management Plan and a formal response to the Section 114 notice are expected to be further discussed in a full council meeting on December 12.  

The Transformation Plan:

• Upping the council tax to at least 5% with further rise possible
• Creating a smaller council – reduced support in the Mayor’s office and reviewing cuts to any digital workforce 
• Spending cuts to the Family Justice Service review, meaning they will be exploring alternative funding for domestic violence serves 
• Moving savings from the Mental Health 117 aftercare project (free mental health support after you leave hospital) 
• Change the use of library buildings to multi-use community hubs and reduce the investment in the libraries themselves 
• Potential selling of the Samuel Coleridge-Taylor youth centre and the Cherry Orchard Garden Centre 
• Potential selling of the retail park Colonnades and reducing spending in other investment properties such as the office space Davis House 
• Potential selling of various properties owned by the council and car park sites 
• Using their ‘opening the books’ scheme to become more transparent with council expenditure