Croydon Council must 'act urgently' to save money

Auditors said the 'Future Croydon' transformation programme must now deliver its full savings 'without delay'

Croydon Council remains in a position of "unsustainable" finances and must urgently act to reduce its operating costs and long-term debt, according to a new report.

Independent auditors issued a rare statutory recommendation to the south London council – a formal warning requiring urgent action because "arrangements to achieve financial sustainability have deteriorated".

Some positives were also found - how the pension fund is managed, improvements to its housing service and progress in dealing with housing complaints.

Mayor Jason Perry said Croydon had made "huge progress" in stabilising finances and said: "The government and the council need to work together on a long-term solution."

Auditors said the council's pension fund was well managed

The government sent in its own team to take control of the council in August after it faced bankruptcy three times in the past five years.

Croydon Council's finances is still relying on financial support from central government. The amount lent to the authority has sharply risen from £51m to £136m in one year.

Concerns have been raised about how these debts will impact local residents and services.

To reverse the decline, appointed commissioners from the government have been tasked to ensure the council meets its legal duty to deliver best value on its day-to-day services like education and social care.

The team has powers to override local decision-making, has powers over financial management and the "appointment, dismissal and performance management" of senior council staff.

'Unsustainable financial position'

In their report, auditors Grant Thornton said: "The unsustainable nature of the financial position, alone, resulted in the council not achieving their exit strategy from existing government support."

They add that "arrangements to achieve financial sustainability have deteriorated" in the past year, despite previous efforts to stabilise the council's budget.

Auditors also warned that without a viable debt solution, the council cannot demonstrate that it is capable of achieving financial independence or delivering the savings needed to protect services.

The council has accepted all the recommendations made.

Mayor Jason Perry stated that he would oppose any externally imposed cuts that would impact Croydon residents

While the overall picture is serious, the report also highlights some areas of progress.

The Pension Fund remains well-managed, with net assets rising to £1.96bn, an increase of £205m over the year.

The Housing Service has also improved and a new Housing Assurance Board, including residents and independent experts, is now overseeing quality and performance.

Work is also under way to improve the handling of complaints with a dedicated officer appointed to improve responsiveness and coordination with investigations.

Historic debt

However, several serious weaknesses remain.

Auditors stress that the Future Croydon transformation programme, aimed at modernising and streamlining council services, must now deliver its full savings without delay.

Special educational needs and disabilities (SEND) services remain a concern, with auditors calling for urgent improvements to data quality and budget monitoring.

The report also recommends better transparency around financial reserves.

Updated financial forecasts and benchmarking data should be included in future budget reports to give councillors a clearer picture of the sustainability of reserves and the financial risks facing the authority.

Croydon's current financial crisis is the result of decisions made by successive administrations over the past decade, including a number of investments made by the council which failed.

Speaking to the Local Democracy Reporting Service, mayor Jason Perry said: "Grant Thornton's report is absolutely right to highlight the elephant in the room – Croydon's historic debt.

Perry added: "I welcome the recommendation to deal with it head-on.

"I have worked closely with the commissioners and auditors throughout this process, and they recognise the huge progress Croydon has made."