Croydon Council has reported a provisional underspend of £27.3 million on its General Fund revenue budget for the 2025-26 financial year. This achievement aligns with a key target set by the council's Stabilisation Plan, indicating progress in financial management amidst ongoing challenges.
Despite the reported underspend, the council faces ongoing unfunded local government cost pressures that exist nationally, regionally and locally relating to increases in demand and market prices which need to be addressed by Government changes to policy and/or funding levels.
The report also highlights the Council's historic borrowing and subsequent debt burden and national, regional and local service pressures continue to be critical to the non-sustainability of the Council's revenue budget.
Executive Mayor Jason Perry acknowledged the progress made in improving financial oversight but stressed that significant hurdles persist. It is difficult to see a route out of the EFS programme over the medium-term that does not include some sort of Government intervention,
he stated, highlighting the necessity for Croydon to demonstrate its commitment to making difficult budget decisions. The Executive Mayor is referring to the need for some sort of Government intervention
to see a route out of the Exceptional Financial Support (EFS) programme over the medium-term. The forms this intervention could take are not specified beyond the general idea of debt write-off, or similar
.
The EFS programme refers to Exceptional Financial Support
from the Ministry of Housing, Communities and Local Government (MHCLG). Despite its name, this programme does not provide direct financial support to local authorities. Instead, it enables councils accessing the scheme to borrow for day-to-day expenditure and to use the receipts from asset disposals for the same purpose. This is not a sustainable financial strategy.
The aggregate of capitalisation directions (funded by EFS) is forecast to reach approximately £900 million by 2030. The council's objective is to return Croydon to financial sustainability; able to set budgets without the need for Exceptional Financial Support.
Key financial performance figures for 2025-26 include:
- General Fund revenue budget: £27.3 million underspend.
- General Fund capital programme: £38.6 million underspend.
- Housing Revenue Account (HRA) revenue: £1.6 million underspend.
- HRA capital programme: £13.5 million underspend.
The General Fund capital programme showed a provisional underspend of £38.6m (18.0%) against the revised budget of £214.6m. This was due to slippage occurred in the acquisitions programme and the Regina Road project owing to the timing of expenditure which will occur in 2026-27.
Additionally, underspends in repairs and compliance related capital was owing to a strengthening of the delivery programme in respect of lifecycle replacements and major works programmes. This has led to a more accurate separation between capital and revenue activity at the earlier stage of the repair being raised and categorised.
The council's financial strategy will involve confronting difficult decisions regarding service levels and charges, with a greater focus on managing demand and costs in high-expenditure areas such as social care, housing, and SEND provision. The council is anticipating difficult decisions about the levels of service provided and the charges made for these services.
Specifically, the financial strategy aims to manage the demand for and cost of these services much more effectively
in these areas. For social care, the strategy includes increasing the scale of the Adults Living Independently (ALI) programme, focusing on prevention, outcomes-based commissioning, and working with partners to meet residents' needs within neighbourhoods. For housing, the strategy involves improving prevention and relief outcomes, increasing housing supply, optimising income and costs, and reducing reliance on costly temporary accommodation. The report also mentions a modest initial investment of £0.25m in housing services
to pilot approaches to reduce temporary accommodation costs. For SEND, the strategy includes expanding local provision, developing specialist resource provisions within mainstream schools, and investing in local special school capacity.
Croydon's costs in 2024/25 for long term support for adults aged 18 to 64 per head of population is £295.98 against the London average of £283.00. For long term support for adults aged 65 and over per head of population, it is £1,433.03 against the London average of £1,432.96.
For SEND, the report states that Croydon's children's services are in the upper range of cost
and that Croydon's children with EHCPs is well above the England, London and statistical neighbour comparator groups.
For housing, the report highlights exceptionally high levels of homelessness demand
and continued reliance on nightly paid temporary accommodation and associated cost pressures.
All budget options will be published in the autumn to ensure transparency. The report states that All these options will in due course be published, including those that the Administration chooses not to include in its budget. This will ensure full transparency over the process and its outcomes. It would be premature to include all of this within this report, given the significance of the decisions, but the commitment is to do so in the autumn and considerably earlier than 11 November, which was when the draft budget for 2026/27 was published.
Public reports pack 29th-Jul-2026 18.30 Cabinet.pdf
