Croydon Council needed a £120m Government bailout in 2021 to keep operating
(Picture: Getty Images)A London council forced to declare bankruptcy less than two years ago is now facing a £19 million black hole in its budget this financial year.
Croydon received a taxpayer-funded Government bailout worth more than £120million in 2021.
Next Wednesday the council is set to discuss its current financial performance, which shows cash gaps in several departments that could see the town hall forced to cap spending on services.
The new Tory mayor Jason Perry blamed the previous Labour administration for the budget woes. He said the council’s finances were “much worse than anyone could have anticipated” and had been “built on sand”.
The latest overspend was blamed on declining income from parking charges and traffic fines as well as mistakes in the housing benefit budget which “should have been recognised earlier” and a gap of more than £3million in the housing revenue account.
The Conservatives won control of the council from Labour in May following the local authority’s financial collapse.
It issued a Section 114 notice, effectively declaring itself bankrupt, in November 2020 after a series of failed property speculation deals cost the borough millions.
The notice banned all new expenditure except for statutory services for protecting vulnerable people.
Croydon’s Labour party denied it was responsible for the council’s current financial situation, and said it had left £27million in reserves.
A council spokesman said that £19million would be the maximum overspend if “every risk materialises” and mitigations measures are not effective.
They added that forecasting showed the budget hole would be around £9million.
