Croydon Council has gone bust after running up £1.5 billion in debt, according to local MP Chris Philp.
In statement the council acknowledged it faced "severe ongoing financial challenges" and all new non-essential spending would be scrapped.
In a letter to councillors, finance director Lisa Taylor outlined the serious issues facing the council which cannot balance its budget this year, which it is required to do by law.
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.