Croydon Council declares ‘effective bankruptcy’ with £1.3bn debt

Croydon London Borough Council has declared “effective bankruptcy” for the third time in two years. The council said it faces an “existential question” after collapsing under the weight of a “toxic debt burden” running to more than £1bn. Croydon has asked ministers to write off £1.3bn of debts, including £500m from a series of ill-fated commercial investments. It argues that the sheer scale of the crisis requires an unprecedented financial bailout from the government. The council is spending £47m a year, a sixth of its annual budget, on debt repayments. Next year it will have to cut 43% of its budget to meet its legal duty to balance the books. It has already sold off £50m of assets and is using its £150m capital funding to prop up day-to-day spending. The Guardian