Croydon Council has provisionally balanced its 2024-25 budget by using £67.9 million in one-off reserves and capitalisation directions, according to the 2024-25 Provisional Outturn Financial Performance Report presented at the Scrutiny & Overview Committee meeting on Tuesday.

The report indicates a general fund revenue budget provisional overspend of £29.2 million. The largest overspends occurred in Housing (£19.6m) and Children, Young People and Education (£17.0m), with Adult Social Care and Health overspending by £5.0m and Sustainable Communities, Regeneration & Economic Recovery by £0.9m. This reduces to a £0.7 million underspend after the use of one-off corporate earmarked reserves, a business risk earmarked reserve, capitalisation directions, and a risk contingency budget.

Specifically, the council is using £51m in capitalisation directions (including £13m not used in 2023-24) to reduce the general fund revenue budget provisional overspend. However, the report cautions that annual capitalisation directions (transferring revenue cost into capital cost which must be funded over 20 years) increases the Council's debt burden (each £1m of capitalisation adds £85k per annum revenue cost) .

The report also notes that the council's historic borrowing and debt continue to be critical to the non-sustainability of the council's revenue budget. Dialogue with the Ministry of Housing, Communities, and Local Government (MHCLG) is ongoing regarding options for further financial support from the government to address the level of structural indebtedness, ensuring the council can deliver sustainable local government services.

The provisional outturn Medium Term Financial Strategy (MTFS) savings achievement was £22.3m (80.6%) against the total savings target of £27.7m. The £5.4 million shortfall was attributed to:

  • Assistant Chief Executive: £0.05m
  • Children, Young People & Education: £2.545m
  • Resources: £0.100m
  • Sustainable Communities (SCRER): £0.334m
  • Cross-Directorate / Corporate: £1.750m

The Cabinet is scheduled to consider the report on Wednesday.