Croydon Council is facing significant financial challenges, including an estimated £72 million in debt servicing costs for the 2025-26 financial year. The council's debt burden is significantly higher than other local authorities; data from the Office for Local Government (OFLOG) at the end of 2021-22 showed that Croydon's debt servicing costs consumed 16% of its core spending power, double the median for English authorities.
The figure was revealed in the 2025-26 Period 5 Financial Performance Report, which highlighted that the council's historic legacy borrowing and debt burden continues to be critical to the non-sustainability of the Council's revenue budget.
The report further explains that concerns have been raised about value for money and investment decisions, particularly regarding assets like Fairfield Halls, Croydon Park Hotel, and the Colonnades, where the debt incurred exceeds the assets' current value. This also includes the debt write-off against loans historically given to Brick By Brick.
The Period 5 report also noted a forecast underspend of £22.6m in the General Fund revenue budget, contributing to targets set by the Stabilisation Plan. This underspend will reduce the necessary level of capitalisation directions from £136m to £113.4m. The expected decrease in capitalisation direction usage owing to the Stabilisation Plan accounts for £27.3m of the forecast underspend.
A related report stated that the Housing directorate has a General Fund forecast underspend of £0.1m against the net budget of £52.4m. It also noted ongoing increased demand within the nightly paid portfolio, with the average cost per night increasing to £81.32 from £79.52 in the prior year. According to the supplementary agenda - Housing GF and HRA report and presentation, this increased demand aligns with trends seen in other London boroughs, with London Councils reporting record levels of homelessness requiring temporary accommodation. The council is addressing this pressure through prevention work and initiatives within the Stabilisation Plan to manage demand for paid accommodation, achieving a net reduction in temporary accommodation placements year-to-date.
