The London Borough of Croydon has issued a section 114 notice banning any further non-essential spending, as it struggles to balance its books.
There have been concerns about the financial management at the council. Auditors Grant Thornton issued a ‘Report in the Public Interest’ in October warning about looming financial problems.
Now Croydon’s FD Lisa Taylor has sent a letter to councillors outlining the scale of the problem. She is predicting a potential budget shortfall of £66 million.
Issuing the notice is recognition that despite all efforts to do so the council cannot now balance its budgets this year, which it is required to do by law.
The council is now in talks with the government about the financial support necessary to keep it running.
Northamptonshire County Council was forced to take the same steps two years ago.