Croydon Council’s debt remains stubbornly above £1.4billion despite efforts to cut costs and bring in more revenue
Croydon Council has approved a 4.99% increase in council tax as part of its final budget before the local elections in May. The rise, agreed at last night’s full council meeting, is the maximum permitted by the government without triggering a referendum.
The increase includes a 2% levy ring-fenced for adult social care and is expected to generate an additional £13.5 million for local services. It comes as the borough continues to grapple with significant financial pressures and a long-standing debt burden.
Croydon currently spends £86 million a year servicing its debt, which remains above £1.4 billion. During the meeting, Green Party councillor Ria Patel noted that in 2021 Conservative Mayor Jason Perry had pledged to reduce the council’s debt to below £1 billion, but after four years it has not fallen beneath £1.4 billion.
Responding, Mayor Perry insisted the debt had not increased under his administration and had “marginally come down”, adding that it remains “an extremely difficult level of debt to deal with”.
While Mayor Perry accepted the council tax rise, he rejected Labour claims that the Tory administration had made cuts to services over the past four years. Instead, he said the authority had made “changes” designed to make Croydon one of the most efficient councils in London.
Those changes include closing four libraries and increasing opening hours at the remaining nine. The approved budget also sets out plans to deliver a further £34 million in savings over the coming year.
The council has consistently overspent across departments during Mayor Perry’s time in office. Finance lead councillor Jason Cummings took responsibility but told members that such overspending is common among councils nationwide.
Mayor Perry attributed the overspend to rising demand in homelessness services, SEND provision, and health and social care, all statutory responsibilities the authority must meet. He also took aim at the previous Labour administration, saying: “The reality is the situation in Croydon has been made much worse by the financial situation that this council was already facing.”
“In really difficult times, tough decisions had to be made to stabilise the finances,” Mayor Perry added. One such decision was his move in 2023, his first year in office, to raise council tax by 15% — a rise he said left him “very angry” but brought in £20 million for the council.
Since then, increases have remained within the 4.99% cap.
Mayor Perry criticised the opposition benches for what he saw as a lack of alternatives offered. He said Labour have “put forward nothing to suggest how they would do it differently”.
“This budget is about one thing, keeping Croydon on track,” he told the chamber. “We cannot risk going backwards; we must keep moving forward.”
Councillor King said Labour’s alternative will be set out in its local election manifesto. He also said the Mayor had failed in his pledge to fix the finances, adding: “We’ve had four years of inaction, four years of inertia and four years of incompetence.”
Liberal Democrat councillor Claire Bonham also criticised the council for the lack of public consultation informing the budget. She said: “It’s really not clear how you’ve taken residents’ concerns into account in developing either the budget or the future vision.”
In response, Mayor Perry said this year’s council tax consultation was run differently due to budget timings. He added that the approach, raised at scrutiny, would be reviewed following minimal feedback, with a return to the previous model planned next year.
Croydon’s 31 Labour councillors abstained from voting on the budget and did not table an alternative proposal. Only the borough’s two Green councillors and sole Liberal Democrat voted against the budget.
The budget also sits alongside £40 million of investment in key regeneration projects in the town centre. The council has also received funding through the government’s Pride in Place and Levelling Up schemes.
Despite this, Croydon continues to rely on Exceptional Financial Support (EFS) from central government, which allows councils to fund day-to-day costs through borrowing or asset sales.
The authority has requested a further £119 million Capitalisation Direction for 2026–27, down from an original estimate of £153 million. Since 2021, Croydon has received more than £500 million in EFS and has sold assets over the past four years to help meet its obligations.
All parties welcomed changes to the government’s fair funding formula, which will see Croydon receive £61.8 million over the next three years — a 14.8 per cent increase on previous grants. Mayor Perry cautioned, however, that the uplift would still not be enough to resolve the council’s financial challenges.
The state of the town centre prompted further clashes across the chamber. The Mayor claimed Croydon now has “a much more vibrant town centre than we had four years ago”, a view rejected by Cllr Patel and Labour’s Fairfield councillor Chris Clark, who highlighted the number of closed or struggling businesses.
Labour mayoral candidate Rowenna Davis also came under fire from Conservative members. Her suggestion – in an exclusive interview with the Local Democracy Reporting Service (LDRS) – that she would “consider” council-led housebuilding similar to the former Brick by Brick company was cited by Mayor Perry and others as evidence that Labour had “not learnt their lesson”.
Conservative councillor Mario Creatura described Cllr Davis’s proposals as “financially delinquent”, adding that the compulsory purchase orders (CPOs) she proposed to speed up redevelopment would “transfer every single risk onto the taxpayer”. Cllr Davis told the LDRS that CPOs would be a “last resort” and that any decision to proceed with council-led building would be shaped by fiscal responsibility.
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