Croydon underfunded by £728 per person compared to Southwark

• Southwark receives £728 more funding per resident than Croydon under the current council funding system.
• Croydon politicians claim the funding system is outdated and unfair, disadvantaging their borough.
• Croydon’s Executive Mayor Jason Perry and Labour mayoral candidate Rowenna Davis have launched separate campaigns urging government reform on council funding.
• Both leaders highlight Croydon’s growing population and social challenges as under-recognised in funding allocations.
• Mayor Perry has written to Housing Secretary Steve Reed calling for the Fair Funding Review to be fully implemented for Croydon’s benefit.
• The review aims to replace decade-old data with updated measures based on current population needs and deprivation.
• Analysis from the Institute for Fiscal Studies shows significant regional disparities in public service funding and spending needs.
• Political tensions mount with both mayoral candidates claiming initiative leadership, ahead of the May 2026 election.
• Despite calls for fairer funding, Croydon’s historic £1.4bn debt remains unaddressed by funding reforms.
• Comparisons are drawn with Woking Council’s recent £500m government bailout, increasing calls for similar support for Croydon.

Why is Croydon claiming it is underfunded compared to Southwark?

As reported by Rowenna Davis to the Local Democracy Reporting Service (LDRS), Labour’s mayoral candidate emphasised visible disparities between Croydon and neighbouring boroughs like Southwark. She said, 

“Anyone who goes up to the border with our neighbours can look across the street and see a visible difference, there is less fly-tipping, and it looks cleaner.” 

This, she argued, is a consequence of a

“current funding formula that has failed to reflect Croydon’s growing social and economic challenges.”

Croydon politicians argue that years of underfunding have deepened inequalities across the borough, intensifying pressure on essential public services and residents. They call for urgent government intervention to reform the outdated funding system that determines council budgets.

What actions have Croydon’s political leaders taken to address funding concerns?

Conservative Executive Mayor Jason Perry has actively campaigned for a fairer funding settlement. In a letter to the Secretary of State for Housing, Communities and Local Government, also Croydon North & Streatham MP Steve Reed, Mayor Perry urged full delivery of the Fair Funding Review, a government initiative announced in June 2025. This review aims to update funding allocations based on current population needs and deprivation rather than decade-old data.

Addressing the LDRS, Mayor Perry stated:

“For far too long Croydon has been short-changed by an outdated system that simply didn’t recognise the pressures we face. We’ve stabilised the council’s finances, restored good governance, and shown what sound management can achieve. Now the government must follow through and deliver a settlement that truly reflects need and deprivation.”

Mayor Perry also cited early government modelling suggesting that Croydon could substantially benefit from the review, particularly recognising population growth, social challenges, and rising service delivery costs.

Labour’s Rowenna Davis has also launched a campaign calling for the government to provide a fairer financial deal for Croydon, underlining the need to address longstanding deprivation. Davis emphasised that her campaign does not seek to reduce funding for neighbouring boroughs but rather aims to secure funding equitable with Croydon’s challenges.

How do experts view the funding disparities across boroughs?

Research by the Institute for Fiscal Studies reveals wide variations in funding for key public services and expenditure needs nationally. This disparity, often described as a ‘postcode lottery,’ arises when funding allocations inadequately reflect local demand and deprivation factors. This systemic inequality exacerbates challenges in areas like Croydon.

What political tensions have appeared around the funding debate?

Both Mayor Jason Perry and Labour’s Rowenna Davis claim to have been first in launching campaigns to secure fairer funding, signalling political positioning ahead of Croydon’s May 2026 mayoral election.

Davis criticised Perry’s approach, accusing him of “scaremongering” regarding government actions such as sending commissioners to oversee the council earlier this year. She told the LDRS, 

“I really hope he has learnt his lesson, but I still find the outburst quite unforgivable.”

In response, Mayor Perry expressed disappointment at the issue being politicised, stating:

“It’s disappointing that something as important as fair funding for Croydon is being treated as a partisan issue. For over twenty years, councillors of all parties have campaigned for a fairer deal for our borough – this should be a cause that unites us, not divides us.”

Will the funding changes solve Croydon’s financial woes?

Despite the possibility that a revised fair funding settlement would ease pressure on Croydon’s overstretched services, it would not resolve the borough’s historic £1.4 billion debt. There have been growing calls for a government-backed bailout, especially after the recently announced £500 million bailout for Woking Council amid Surrey County Council’s division into two authorities.

Labour’s Rowenna Davis warned of the human impact if funding improvements fail, stating, 

“Let’s face it, Croydon residents already feel pretty squeezed and it gets more and more painful.”

What is the outlook for Croydon’s funding and service future?

Both political leaders acknowledge the urgent need for an updated, evidence-based funding formula that reflects Croydon’s changing demographics and economic realities. The Fair Funding Review represents a crucial opportunity for the government to address entrenched inequalities.

However, with the May 2026 mayoral election looming, political debate and competition over funding and governance promise to intensify. Croydon’s future service and financial stability may depend on both securing fairer national funding and managing the borough’s substantial debt burden effectively.