Croydon Council is continuing to spend more than it can afford in one of its three major departments, landing it a predicted overspend of £7.2m this financial year.

The authority has blamed cuts to local government funding for the budget shortfall in its People department, despite managing to reduce its over spend from last year’s £9.7m.

At a cabinet meeting on Monday councillor, Simon Hall, Labour cabinet member for finance, said funding gaps in the council’s looked-after children, Children in Need, disability services and temporary accommodation services were the cause of the overspend.

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But Cllr Hall said the actual overspend figure was likely to be “much lower”.

He said: “Going back through previous papers I don’t think you’d see a single year where the forecast overspend is as low as it is this year and that is despite huge cuts to our funding.

“I think that is proof of our quality of financial management.

“I do want to recognise that while the people department has a £7m overspend, as we saw last year the actual figure is likely to be much lower.”

In last year’s autumn statement, Chancellor George Osborne revealed funding for the Department of Communities and Local Government (DCLG) would be cut by 56 per cent, from £11.5bn to £5.5bn over the next five years.

Last month Croydon received 27 per cent of a country-wide £1.5m “new burdens” fund, the largest amount given to a local authority.

Some 3,125 families in Croydon were in temporary lodgings as of February this year, which was expected to cost the council £5.4m in 2015-16.

But Cllr Jason Cummings, shadow deputy leader and cabinet member for finance and treasury, question the internal budget control of the authority.

He said: “One of the things that was mentioned [at an audit committee meeting] was that it wasn’t just down to forecasting or demand led pressures but there was a question as to whether there had been sufficient internal rigour to budget control.”

The council has spent about £20m on agency workers in the last year.