Crisis-hit Croydon Council have been put in special measures as the Government seeks to have more than half a billion pounds of debt written off.
Levelling Up Secretary Michael Gove announced the move as he authorised Whitehall-appointed officials to take a greater role in running the town hall.
The borough’s executive mayor Jason Perry will continue to decide policy.
Tory-run Croydon Council issued its third bankruptcy notice in two years in November and earlier this month signed off a record 15 per cent council tax rise in a bid to smooth out its finances.
The special measures move clears the way for central government to write off more than £500million of loans the local authority has racked up and cannot pay back.
Tony McArdle, who was appointed chair of the borough’s improvement panel two years ago, will be in charge of significant financial decisions in Croydon from now on. He was previously brought in to run Northamptonshire Council after its financial collapse in 2018.
Croydon accrued a “toxic” £1.6billion of debt under the previous Labour administration.
The Conservatives won control of the town hall in the local election last May.
Mr Perry said: “Given the additional £224million of capitalisation directions agreed last month, and our request for an unprecedented debt write-off, it is understandable that Government wants to formalise our current improvement arrangements as a precautionary measure in light of the additional historic issues which have been uncovered.
“I welcome the continuing focus Government and the Improvement Panel are giving to support our goal of returning sustainable local government to Croydon and reducing the £1.6bn toxic debt level inherited from the previous administration.”
Croydon Labour said in a statement: “Giving new powers of direction to Government officials is a clear sign Government is losing confidence in the leadership of the council.”
The news came in the same week that Croydon unveiled the art projects it will put on as London’s Borough of Culture 2023.
Sadiq Khan confirmed the borough would receive a £1.35m grant to “showcase local talent through a diverse & inspiring programme of art and performances”.
