On Friday 25th February the Local Government Chronicle (LGC) reported that Croydon Council faces “new financial collapse amid concerns it misused £73m”, and may need to issue a new Section 114 notice (de facto bankruptcy) following the 2 issued in 2020.
The borough is seeking approval for £75m in loans covering the existing and next financial year. This follows the towns auditors raising concerns about £73m from the sale of 350 properties, which LGC states that “Auditors have queried the way Croydon categorised that money as a capital receipt and spent it on transformation funding.”
The Chronicle reports “A dispute is understood to be ongoing between the council and its auditors Grant Thornton, which is still yet to sign off on the council’s 2020-21 accounts over the alleged misuse of the £73m”.
If auditors decided these funds should come from the revenue budget this could lead to a new Section 114 notice being issued, and no doubt further bad news for Croydon’s taxpayers.
Full article: https://www.lgcplus.com/finance/councils-in-anxious-wait-for-capitalisation-loan-approval-amid-s114-fears-25-02-2022/