The Government should write off Croydon LBC's £1.3bn of General Fund debt, a senior opposition councillor has urged.

Chair of the council's scrutiny and overview committee, Rowenna Davis, said that if this was ‘unpalatable' to Government it should ‘bundle up' the council's debt, allowing Croydon to pay it back with a low interest rate over ‘many years'.

She said: ‘The people paying for these mistakes are the Croydon taxpayers who haven't done anything wrong.'

Croydon said it continued to be in ‘regular' talks with Government ministers about a ‘long-term solution to the council's debt in order to balance its books'.

The council's elected mayor Jason Perry said: ‘Essentially, we're insolvent.

‘It's a difficult ask of Government.

'The risk is its seen as rewarding failure.

‘The conversations are good.

'It's not easy but we're still persisting.

'Writing off the debt is one of a whole range of options being discussed.'

But Cllr Davis said: ‘We've heard the same thing for over a year and our debt situation is getting worse.

'National Government's answer at the moment is increase your debt burden – that's not a sustainable answer.'

In a message to staff last month, council chief executive Katherine Kerswell wrote: ‘The council's debt burden is still our biggest financial issue.

'We do not have a solution for that right now, but finding the right resolution is at the centre of all the conversations we are having with Government.

'We must agree a package of support that will enable Croydon to have a sustainable financial future.'