The borough has been significantly impacted by increased demand for homelessness assistance, social care, and the rising cost of children’s placements and accommodations
Croydon Council has announced a bold set of plans aimed at addressing its financial challenges while safeguarding public services for its nearly 400,000 residents. The Council, facing rising demand and escalating costs similar to other local authorities, is set to modernize its operations, improve efficiency, and strengthen services for the local community.
The borough has been significantly impacted by increased demand for homelessness assistance, social care, and the rising cost of children’s placements and accommodations. These factors have contributed to a steep decline in the Council’s financial standing, leading to a predicted £98 million budget shortfall for the 2025/26 fiscal year.
Despite these challenges, Croydon’s financial management has received praise from independent bodies, including the Council’s Improvement and Assurance Panel (IAP), the Local Government Association (LGA), and Ofsted. The Council has successfully balanced its budget for two consecutive years, with government support for debt management. Additionally, Croydon has achieved savings averaging £41 million annually since 2021—well above the savings made by other London boroughs.
Croydon’s general fund debt stands at £1.4 billion, with next year’s debt servicing cost reaching £71 million. The Council is once again seeking £38 million in government support to manage this burden, alongside a total of £136 million in exceptional financial assistance for 2025/26.
In response to these financial pressures, the Council is proposing a 2.99% increase in general Council Tax and a 2% hike in the adult social care precept levy, both of which remain within the referendum cap.
While the Council acknowledges the need for government assistance, it is also taking proactive steps locally to address its challenges. New strategies include the adoption of digital tools to enhance operational efficiency, streamline communication with residents, and improve customer service. Additionally, the Council plans to collaborate more closely with charities and local partners, focusing on preventative measures to avert crises and utilizing community hubs to deliver services.
A key element of Croydon’s plans involves the regeneration of its town centre to boost investment and growth across the borough. The Council has collaborated with the Boston Consulting Group, Newton, and Impower to develop these plans, having engaged with residents, businesses, and staff in extensive consultations.
If approved by the Cabinet, the proposed changes will be implemented over the next four years, with the goal of saving £27.7 million annually by 2028-29 while delivering improved outcomes for residents.
However, the Council’s efforts alone will not be sufficient to ensure long-term financial sustainability. Croydon continues to negotiate with the government for a permanent solution to its debt, beyond the use of capitalisation directions, which allow the borrowing of funds to cover day-to-day expenses.
“Despite the significant progress we’ve made, the financial pressures we face are overwhelming, driven by increasing demand and rising costs affecting councils nationwide. The scale of this challenge means that savings alone won’t suffice. We must act now, modernize our approach, and become more efficient to protect public services for the future. I am committed to working with the government to address these issues and secure a sustainable future for Croydon,” said the Executive Mayor. Croydon Council’s transformation plans reflect its commitment to modernizing local government while balancing financi
