There is a safeguarding risk to Croydon children’s services as a result of a £2.3 million funding gap in the cost of looking after unaccompanied asylum seeking children and young people.

All unaccompanied children seeking asylum in the UK must register at the Home Office unit in Croydon town centre. In the past decade Croydon has looked after more than 5,000 of these vulnerable children, but central government has not repaid most of the costs as expected.

Since 2015, Croydon has had to top up its Home Office funding every year by £7m-£9m. Even with no new arrivals, Croydon’s funding gap for looking after unaccompanied asylum-seeking children will be £7m by 2024 – partly due to the reduction in funding when unaccompanied children turn 18. The Improvement and Assurance Panel, appointed by government to oversee Croydon’s continuing financial improvements, has verified this funding gap.

Councillor Hamida Ali, leader of the council: “Despite months of constructive discussions with government, there is still no word from government on providing the financial support everyone has agreed must be found and the situation has now become urgent.”

The council is calling for ministers to properly fund these costs and is backed by the borough’s government-appointed Improvement and Assurance Panel, which says the £2.3m gap this year is a serious financial risk to the council without urgent intervention.

The leader of the council is writing to the Secretaries of State for the Home Office, MHCLG and the Department for Education to request a meeting to outline the case for urgent financial support. Croydon is also urging the government to make it mandatory for all councils to share responsibility for new arrivals.

The Home Office recently announced plans for changes to the National Transfer Scheme which means that responsibility for unaccompanied asylum seeking children will be more fairly distributed across the UK.

The cabinet is set to ask the government to reduce Croydon’s unaccompanied asylum-seeking rate to 0.07% of all local children. Applying this national threshold would mean Croydon had 66 children – instead it has 156, plus 477 older care leavers who had arrived unaccompanied.

There is also a recommendation that officers draw up all available options that limit the council’s exposure to financial risk. Monday’s meeting comes weeks before a three-month period comes to an end where 24 other London councils have voluntarily taken new arrivals to help Croydon.

Councillor Alisa Flemming, cabinet member for children, young people and learning said: “We want to be able to continue to play our part and help support unaccompanied asylum-seeking children and young people, but it is now crucial that the Home Office address the historic funding pressures that they have repeatedly fallen short on meeting.

“We cannot continue to carry such an unreasonable and unsustainable financial burden – the forecast budget gap for the council’s care of unaccompanied children and young people sits at £2.357m in this financial year, rising to a £7.149m funding gap over the period of the council’s Medium Term Financial Strategy. If the current number of children we are providing care for rises further then this will pile greater pressure on our finances. This pressure is unsustainable and could pose a serious safeguarding risk to the care we are able to provide for children. I urge the Home Office to hear and act positively to address these very real and serious concerns,” she added.

“In the longer term, the government must review its approach to the new National Transfer Scheme and make it mandatory. The fairest and most sustainable way forward is for all local authorities to share this important duty to some of the world’s most vulnerable children. Experience has already shown us that a voluntary system just doesn’t work,” she concluded.