By Tara O’Connor, Local Democracy Reporter
Around £40m was wrongly taken from Croydon council’s fund for social housing over the last few years.
This was one of the issues that forced the authority to issue its third bankruptcy notice in just two years.
The council’s scrutiny homes sub-committee heard the latest at a meeting on Monday night.
The council’s director for housing, Susmita Sen, explained that £9.5m a year was being taken from the ring-fenced Housing Revenue Account (HRA) and used by the council’s general fund.
The HRA holds rent and charges from council tenants and is only supposed to be used for the authority’s social housing stock.
It is this account that funds maintenance and repair costs for council homes.
Ms Sen said: “What we’ve established is that there has been an overcharge of the HRA for several years.
“These are for services that are general fund activity, such as the homelessness service, we have established to date £9.5m has been recharged to the HRA year on year.
“What we’re looking to do to rectify that situation is to return around £40m to the HRA. Whilst it is bad news for the general fund it is good news for the HRA.”
Ms Sen said there have been other local authorities that have been in the same position and had to return the money.
She warned while the current figures date back to 2019, more incorrect charges to the account could be uncovered as the past finances are re-examined. The last three years of Croydon council’s accounts are yet to be signed off by its external auditors.
On November 22, the council issued a Section 114 notice declaring it could not balance next year’s budget, which is a legal requirement.
It blamed “unresolved historic accounting risks” which left the council with a £130m budget gap for next year.
The council is now waiting to hear whether the government will step in to help the struggling authority.
Pictured top: Croydon town hall (Picture: Grahame Larter)