Last week the government gave its latest official response to concerns around its Fair Funding 2.0 model, outlining how it was changing its formula to factor in housing costs before calculating levels of deprivation.
The government also outlined how the 5% cap on council tax rises without a referendum could be relaxed on a case-by-case basis for authorities in financial trouble.
But Croydon will not look to raise the local rate by more than the usual 5% limit from April 2026, Mayor Jason Perry has said, despite the authority still grappling with £1.4billion of debt, with government-appointed commissioners overseeing the turn-around efforts.
He told the Local Democracy Reporting Service (LDRS): “On council tax, my position is clear: I have no plans to go above the existing cap.
“My focus is on securing a fairer funding settlement so Croydon is not forced into difficult decisions in future.
“If the government changes the national framework following the Fair Funding Review, we will assess the detail carefully, but my priority will always be protecting Croydon residents, stabilising the council’s finances, and delivering services responsibly.”
Mayor Perry welcomed the government’s “next steps” on the Fair Funding changes, which he has previously described as a “vital opportunity to correct years of underfunding” in Croydon.
Both Mayor Perry and Labour’s Rowenna Davis, his main mayoral rival in next year’s elections, have launched campaigns calling for a fix to the “outdated” funding settlement, which they say has long constrained investment in local public services.
Under the announced plans, the government intends to scrap funding formulas that disadvantaged deprived areas, while pledging a £5billion boost over three years to ensure fairer access to local services.
A final decision on the review is expected in December.
Responding to the news that the formula had been tweaked, Cllr Davis told the LDRS: “This is a huge win for our campaign. But we’re not there yet.
“We’re going to keep fighting until this deal is in black and white. Conservative Mayor Jason Perry has sat on the council for 30 years and has failed to get this far. With a Labour government, Croydon’s time could finally be coming.”
Secretary of State for Housing, Communities and Local Government, and Streatham and Croydon North MP, Steve Reed, added: “The Conservative Government spent 14 years underfunding Croydon, leaving our streets dirty and council services failing, and local Conservatives went along with it all. Labour’s Croydon mayoral candidate Rowenna Davis will keep campaigning for the best possible result for Croydon when the final figures are confirmed in December.”
Mayor Perry and Cllr Davis both claim to have been the first to organise a Fair Funding campaign in the borough.
Responding to criticisms of the current Conservative administration, Mayor Perry told the LDRS: “I was part of the Conservative council that launched a Fair Funding campaign back in 2006, and since my election in 2022 I have worked cross-party with other London councils to lobby successive governments for a fairer settlement. I am pleased that ministers are now acting.
“What is striking is that all of this has happened without the involvement of Councillor Davis’s partisan petition, which was launched three months after the government’s consultation closed on August 15.
“I submitted a detailed, non-partisan response on behalf of the council, in the long-standing tradition of Croydon speaking with one voice on funding. The truth is simple: the government was already reviewing local government funding and progressing the next steps before and during Labour’s petition drive.”
Responding to the government’s Fair Funding 2.0 consultation response, Cllr Pete Marland, Chair of the Local Government Association’s Resources Committee, said: “The previous opaque funding system weakened councils’ financial sustainability and essential services. Positive measures in these reforms include multi-year settlements, fewer fragmented ring-fenced grants, and reduced reliance on competitive bidding.
“However, some councils will clearly do better than others from these allocation plans. While it is good the government has pledged transitional support, all councils, rural and urban alike, must be protected from real-terms cuts to ensure financial sustainability. It is now critical that the provisional Local Government Finance Settlement is published urgently, so councils are not left waiting until the Christmas period to understand allocations.
“Greater financial certainty and a simpler funding system are important, but council finances remain under severe pressure. Councils face huge cost increases in areas including adult social care, temporary accommodation, special educational needs and home-to-school transport, and need a significant boost in resources to prevent widespread financial failure.”
