They are the only London council in this situation
Croydon Council have issued a section 114 notice "due to the severe ongoing financial challenges facing the authority."
Local Tory MP Chris Philp has claimed the council have 'gone bust' after racking up £1.5 billion of debt.
They are currently the only London borough in such financial ruin and are thought to be the first local authority driven to a section 114 notice since Nottinghamshire City Council in 2018.
The notice means all non-essential spending will cease while an emergency budget is drawn up.
Croydon Council’s new leader, Councillor Hamida Ali, said: “When I became leader of Croydon three weeks ago I promised a new approach which tackles the problems the council is facing head-on.
“We need to be honest about the fact that, for a number of reasons, the council is on track to spend more than we have.
“The Covid-19 crisis and a decade of austerity have had a major impact on our finances but it’s clear the council has also made mistakes, and I am committed to fixing that.
“We know that we cannot do this alone and we want to work in partnership with everyone with a stake in Croydon’s success. That includes seeking financial support from the government and today’s section 114 notice is a part of making that case.
“While we continue to work hard to find savings, we must focus our spending on essential services and protecting our vulnerable residents.
“We're not going to fix these problems overnight and there will be difficult decisions ahead but I want to reassure local people that the council will still be here to support you.
“My priority is rebuilding a financially sustainable organisation, which provides the value for money and high-quality services that residents deserve."
Chris Philip MP has taken a less sympathetic stance on the issue, tweeting "Labour has bankrupt Croydon through poor financial control, running up £1.5 billion in debt and engaging in disastrous commercial property speculation."
London Mayor Sadiq Khan has said he hopes a settlement can be achieved as soon as possible for the good of the residents in Croydon.
A spokesperson for the Mayor of London, Sadiq Khan, said: “Croydon council recently elected a new Leader and senior team to tackle the council’s financial problems head on.
"The council have now issued a section 114 notice, in part because of the impact of Covid-19 on its finances, and is asking the government for additional financial support.
"The Mayor hopes a settlement can be achieved as quickly as possible that serves the best interests of Croydon residents.”
