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.
