Croydon Council Slashes £34m Government Support Request 2026-27

Key Points

• Croydon Council is on track to meet its 2025-26 savings target of more than £48m.​
• The Council plans to reduce its request for exceptional financial support from the Government by £34m in 2026-27, dropping from an original prediction of £153m to £119m.​
• Budget proposals include £34m savings in 2026-27 and £30m annually until 2029, with pledges for extra safe savings.​
• No Council Tax rise above the 4.99% Government cap for London boroughs, in line with Executive Mayor Jason Perry’s promise.​
• Since 2020-21, Croydon has achieved £229m in savings while improving operations, as noted by external bodies like external auditors, Ofsted, the Care Quality Commission, and the Regulator for Social Housing.​
• Government’s Fair Funding Review provides an extra £59.6m over three years.​
• Ongoing challenges include rising service demands, increased costs, and a historic £1.4bn debt burden; debt servicing costs £86m this year via capitalisation directions (additional borrowing).​
• £19m of 2026-27 savings from Future Croydon transformation programme, involving technology, organisational downsizing, prevention focus, and partner collaboration.​
• Executive Mayor Jason Perry states: “Since I became Mayor we have made huge strides in improving the way our Council is run. In the past few years, we have delivered £229m savings alongside better services, whilst investing in the things that matter to residents. That is clean, safe streets with my zero-tolerance approach to crime; restoring pride in our high streets, parks and public spaces; helping children and families to thrive, and supporting our older residents to live longer, healthier, independent lives.”​
• Perry adds: “As Mayor I have continuously campaigned for fairer funding for Croydon. I welcome our borough’s settlement in the Government’s Fair Funding Review as a step in the right direction. But despite this, the Council’s financial position remains incredibly difficult. We continue to work closely with our Government-appointed commissioners to identify sustainable solutions to our financial challenges. I have always said my priority is to fix our Council for residents. I have also been clear that, whilst Croydon needs Government support for historic debt, we will do all we can locally to get our finances in the best possible position. This is a budget that responds to the challenge – stepping up the pace of change to offer our residents the value for money they deserve and expect.”​
• Budget proposals published this week; discussions at Scrutiny and Overview Committee on 10 February 2026, Cabinet on 11 February 2026, and final decision at Budget Council end of month.​
• Related context: Government announced extra £40m annually for three years (totaling around £120m boost) under Fair Funding Review, as per parliamentary statement by Minister Alison McGovern, fulfilling promises by MP Steve Reed.
• Rowenna Davis, Labour’s mayoral candidate, welcomed it: “This decision reverses decades of neglect, in which Croydon received half as much as some inner London boroughs, meaning less money for services to residents, impacting everything from street cleaning to care for the elderly.”
• Peter Underwood, Croydon Greens’ mayoral candidate, noted to Inside Croydon: “Increasing overall funding and better targeting for areas in most need are both steps in the right direction. But there is no mention of dealing with historic debts or changing the unfair Council Tax system, and councils will still be forced into above-inflation tax rises in coming years. This means that Croydon residents will still be left paying for past mistakes by local and national politicians.”
• Additional government measures: £600m Recovery Grant continues; multi-year settlements end postcode lottery; average 23% core spending power increase by end of period.
• Steve Reed stated: “This is a chance to turn the page on a decade of cuts, and for local leaders to invest in getting back what has been lost. Today we’re making sure every community has the funding they need to succeed.”
• Alison McGovern said: “Deprivation doesn’t happen by accident – it’s the result of years of broken systems and wrong priorities. This settlement tackles that head-on by directing funding where it’s needed most. By fixing the link between funding and deprivation, we’re giving local areas the tools to create opportunities, support families and rebuild the services that hold communities together.”
• Earlier projections showed £35.9m savings targeted for 2026-27, including Stabilisation Plan efficiencies (£3.94m) and Target Operating Model savings (£1.1m).

Croydon (South London News) February 7, 2026 – Croydon Council has announced plans to slash its request for exceptional Government financial support by £34m in 2026-27, signalling progress amid persistent fiscal pressures. The local authority, grappling with a £1.4bn historic debt, expects to meet its £48m savings target for 2025-26 while pledging further efficiencies without exceeding the Council Tax cap. This development, detailed in freshly published budget proposals, underscores a commitment to modernisation under Executive Mayor Jason Perry.​

What Savings Has Croydon Achieved So Far?

Croydon Council reports delivering more than £48m in savings for 2025-26, building on £229m achieved since 2020-21. These efforts have coincided with operational improvements, earning praise from regulators including Ofsted, the Care Quality Commission, external auditors, and the Regulator for Social Housing.

As noted in the official council press release, the authority has stabilised its general fund debt, though servicing costs remain high at £86m annually due to capitalisation directions—essentially permission for further borrowing.​

The budget documents emphasise a proactive stance, with £19m of next year’s £34m savings earmarked for the Future Croydon programme. This initiative drives changes such as technology enhancements for customer service, staff reductions, prevention-focused strategies, and deeper partnerships for cost-effective delivery.

Supplementary sources, like Open Council Network reports, highlight specific efficiencies in housing budgets, including £3.94m from Stabilisation Plan measures and £1.1m from the Target Operating Model.

How Will Croydon Reduce Government Support Requests?

The council’s proposals cut the anticipated £153m exceptional financial support need to £119m for 2026-27. This £34m reduction aligns with planned savings of £30m per year through 2029, plus discretionary extras deemed safe.

Executive Mayor Jason Perry, as quoted in the Croydon Council news release, affirmed:

“Since I became Mayor we have made huge strides in improving the way our Council is run. In the past few years, we have delivered £229m savings alongside better services, whilst investing in the things that matter to residents.”​

Perry further elaborated on priorities:

“That is clean, safe streets with my zero-tolerance approach to crime; restoring pride in our high streets, parks and public spaces; helping children and families to thrive, and supporting our older residents to live longer, healthier, independent lives.”

The strategy responds to ongoing collaboration with Government-appointed commissioners, acknowledging the need for local action despite external aid.​

What Is the Impact of the Government’s Fair Funding Review?

Croydon benefits from an extra £59.6m over three years via the Fair Funding Review, as per council statements. Inside Croydon journalist Steven Downes reported a broader £120m boost, with £40m extra annually confirmed in a December 2025 parliamentary statement by Minister of State Alison McGovern.

This 28% funding uplift, exceeding council expectations, stems from efforts by MP Steve Reed and addresses long-standing disparities where Croydon received half the allocation of some inner London boroughs.

Reed commented:

“This is a chance to turn the page on a decade of cuts, and for local leaders to invest in getting back what has been lost. Today we’re making sure every community has the funding they need to succeed.”

McGovern added:

“Deprivation doesn’t happen by accident – it’s the result of years of broken systems and wrong priorities. This settlement tackles that head-on by directing funding where it’s needed most.”

The package includes a continuing £600m national Recovery Grant and shifts to multi-year settlements, promising a 23% average rise in core spending power.

Why Do Financial Challenges Persist for Croydon?

Despite gains, rising service demands, inflation, and the £1.4bn debt legacy pose significant hurdles. Debt interest alone consumes substantial resources, with Inside Croydon noting £70m spent this year on repayments. Perry acknowledged:

“But despite this, the Council’s financial position remains incredibly difficult. We continue to work closely with our Government-appointed commissioners to identify sustainable solutions to our financial challenges.”

Critics like Peter Underwood of the Greens, speaking to Inside Croydon’s Steven Downes, cautioned:

“Increasing overall funding and better targeting for areas in most need are both steps in the right direction. But there is no mention of dealing with historic debts or changing the unfair Council Tax system, and councils will still be forced into above-inflation tax rises in coming years.”

Rowenna Davis, Labour mayoral hopeful, celebrated the funding but highlighted service impacts:

“This decision reverses decades of neglect, in which Croydon received half as much as some inner London boroughs, meaning less money for services to residents, impacting everything from street cleaning to care for the elderly.”

What Does This Mean for Council Tax and Residents?

True to Perry’s pledge, no Council Tax hike beyond the 4.99% cap is proposed. Perry stressed value for money:

“I have always said my priority is to fix our Council for residents. I have also been clear that, whilst Croydon needs Government support for historic debt, we will do all we can locally to get our finances in the best possible position. This is a budget that responds to the challenge – stepping up the pace of change to offer our residents the value for money they deserve and expect.”​

The government emphasises responsible budgeting, with caps on rises left to local leaders. Earlier council documents reference a 2.99% increase plus 2% for adult social care, aligning with the Mayor’s Business Plan priorities like financial stability and community outcomes. Residents can engage via upcoming meetings: Scrutiny on 10 February, Cabinet on 11 February, and Budget Council later in the month.

How Does This Fit Croydon’s Long-Term Strategy?

The proposals tie into the Mayor’s Business Plan 2022-26, focusing on five outcomes: finances, opportunity, children, safety/health, and independent living. Future Croydon exemplifies this through tech-driven efficiencies and prevention. As Perry campaigned:

“As Mayor I have continuously campaigned for fairer funding for Croydon. I welcome our borough’s settlement in the Government’s Fair Funding Review as a step in the right direction.”

Cross-party responses vary; Davis hailed “Croydon is finally getting the funding it deserves!” while Underwood urged debt relief. Full budget details are available via Croydon Council’s agenda for Cabinet on 11 February 2026. This positions Croydon to maximise growth amid constraints, with monitoring by commissioners ensuring accountability.