Croydon Council has approved a financial strategy for 2027-30 aimed at returning the borough to financial sustainability and ending its reliance on Exceptional Financial Support (EFS).

The strategy, approved by the council's Cabinet on Wednesday 29 July 2026, acknowledges significant financial challenges, including high debt levels and the ongoing costs associated with social care, housing, and SEND provision. The estimated total amount of 'overhanging' debt is approximately £1.1 billion, incurred from unsuccessful commercial ventures (£545m) or to fund EFS (£526m to date).

Executive Mayor Jason Perry stated that the council must confront difficult decisions about the levels of service provided and the charges made for these services. These decisions are likely to affect high-expenditure areas such as social care, housing, and special educational needs and disabilities (SEND) provision. The focus will shift from general efficiencies to tackling these largest and highest cost budgets.

Bar chart showing gross current expenditure on long-term support per head of population aged 18-64, comparing various London boroughs before and after savings reductions, with Croydon (Before) highlighted in purple.
Bar chart showing gross current expenditure on long-term support per head of population aged 18-64, comparing various London boroughs before and after savings reductions, with Croydon (Before) highlighted in purple.

A bar chart comparing per head of population Over 65across various London boroughs, before and after savings. )

The council's financial performance for 2025-26 showed a provisional underspend of £27.3m on its General Fund revenue budget, meeting a target set by the Stabilisation Plan. However, the Dedicated Schools Grant (DSG) reported a provisional overspend of £32.7m.

Bar chart showing the deficit/surplus in £m for the Dedicated Schools Grant (DSG) across various London boroughs, with Croydon having the largest deficit.
Bar chart showing the deficit/surplus in £m for the Dedicated Schools Grant (DSG) across various London boroughs, with Croydon having the largest deficit.

The primary drivers behind the DSG high needs block overspend include expenditure pressures on independent and out-of-borough placements, significant demand for speech and language therapy, and more placements of pupils in mainstream schools above budget. Measures to address this include developing local SEND reform plans collaboratively with schools and health providers, working with mainstream schools to expand local provision, and continuing to commission activity focused on securing better value from providers.

To address financial pressures, the strategy outlines plans to manage demand and costs in key areas. This includes reducing the number of children requiring statutory intervention and improving the efficiency of SEND services. The council also aims to reduce its reliance on costly temporary accommodation.

Croydon Council is implementing a comprehensive approach to reduce reliance on temporary accommodation, focusing on demand management, supply management, and optimisation of income and costs. Concrete steps include an 'appointment only' service for homeless assistance, a rapid response team, and a 'one reasonable offer' approach for housing allocation. Supply management involves reviewing nomination agreements with housing associations and improving offers to private landlords. The council is also working to reduce nightly rates to under the Croydon cap and increase rents and service charges in hostel accommodation. A detailed Temporary Accommodation Strategy and action plan will be presented to Cabinet in September 2026. Approximately 100 additional homes were acquired in 2025/26.

As part of the strategy, the council will publish all budget options in the autumn, ensuring transparency. The financial strategy acknowledges the need for potential investment in services, such as housing acquisition programmes. Such investments will only be approved with compelling business cases that demonstrate overall cost reductions and where demand management strategies have been effectively implemented.

The council's debt levels remain high, with approximately £1.1 billion described as 'overhanging' debt not backed by assets. The strategy aims to address this through cost reduction, demand management, and potentially seeking government intervention for debt write-off. To justify government intervention, Croydon will need to demonstrate that it has taken budget decisions reflecting its status as one of the most financially stressed councils in the country.

The delivery of the budget will impact the workforce, with measures to reduce operating costs. Staff at risk of redundancy will be consulted, along with trade union representatives, in accordance with council policies. The council intends to keep as many posts vacant as possible to review and delete them for cost savings or for staff redeployment.

The strategy for measuring the effectiveness of demand management in social care, housing, and SEND provision includes reducing social care costs to at least the lower quartile of London boroughs, increasing homelessness prevention outcomes, and reducing dependence on expensive independent and out-of-borough SEND placements by increasing local provision. The aim is to achieve savings of £15m for SEND to reach median costs, with a longer-term goal of reaching lower quartile costs.

Further details on the financial strategy can be found in the Public reports pack and Decisions from the Cabinet meeting on 29 July 2026.