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Croydon Council has gone ‘bust’ and bans spending with Section 114 notice

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It has emerged that Croydon Council has essentially declared bankruptcy. This news has emerged just weeks after auditors had accused the Labour-led council of years of financial mismanagement. Yesterday, Croydon Council issued a Section 114 notice which essentially bars all new spending except on safeguarding and statutory services.

This is It is the first time a local authority has issued this notice since Northamptonshire County Council did 2018. Back in October, Croydon Council was subjected to a government review after a damning report by an auditor named Grant Thornton which said that “collective corporate blindness to both the seriousness of the financial position and the urgency with which actions needed to be taken”. The report also concluded that warnings about the council’s serious financial situation dating back to 2017/2018 had been ignored.

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In the letter that issued the Section 114 notice, the council’s director of finance Lisa Taylor projected a £66 million budget black hole for the current financial year. The letter said: “Despite the Council having put in place spending controls over the summer 2020, non-essential cost have continued to be incurred. As a result, a formal spending control panel has now been implemented but as the CFO I am still not seeing an organisation that is taking the necessary radical decisions to stop all but essential expenditure”. 

Chris Philp who is the Conservative MP for Croydon South has accused the Labour council of “bankrupting the borough”. He has also said: “Croydon Council has just issued a Section 114 notice – i.e., they are bust. They are the only London borough in this position”.

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