Politicians in Croydon have reacted to the news that the council has effectively declared bankruptcy.

Over the past few months serious financial problems at the council have come to light.

On Wednesday, November 11, director of finance at the council, Lisa Taylor, issued a Section 114 notice, stating that the council will not be able to balance it’s budget this year, with a forecasted £66 million overspend.

The notice bans all new expenditure with the exception of safeguarding vulnerable people and statutory services.

In the next 21 days the council will need to meet to decide on how to come up with how to make savings immediately – until then all spending has to be stopped unless it is approved by Ms Taylor.

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Cllr Hamida Ali

Council leader of just three weeks, councillor Hamida Ali, said that the Covid-19 pandemic and austerity have had a major impact on finances.

But she added: “It’s clear the council has also made mistakes”, and said: “I am committed to fixing that.

“We know that we cannot do this alone and we want to work in partnership with everyone with a stake in Croydon’s success. That includes seeking financial support from the Government and today’s section 114 notice is a part of making that case.”

Councillor Ali said there will be difficult decisions ahead.

Deputy leader of the Croydon Conservatives and finance lead for the group, Jason Cummings, blamed the Labour administration for the financial state of the council.

He said: “I expect even more damming revelations around their decisions to lend hundreds of millions of pounds to their failed development company, Brick by Brick, and to invest in dodgy property deals.”

While leader of the opposition, councillor Jason Perry, accused the council of “playing monopoly”.

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Cllr Jason Cummings

He said: “It is a very, very sad day, Labour has bankrupted the town, it has been on the cards for some time.

“They’ve been playing monopoly, buying hotels and shopping centres hoping that the income was going to come through.”

MP for Croydon South Chris Philp also slammed the council’s decisions to buy the Colonnades Retail Park and Croydon Park Hotel, which went into administration in the summer.

He said: “Labour has led Croydon into bankruptcy by engaging in reckless commercial property speculation.

“We know they have run up a debt of £1.5 billion, higher than any council in London, which costs £43 million a year – money that should be spent on local services in Croydon.”

It was hoped a government bailout would be accepted and mean the council could avoid issuing the notice, but it is now not likely to be confirmed before Christmas which would not give the council enough time to balance the budget if it was not approved.