Tax hikes, more borrowing and party splits: Tory Croydon 2013

CROYDON COMMENTARY: There are signs of panic among Croydon’s ruling Conservatives, as the announcement of a hike in Council Tax has prompted in-fighting among party colleagues. Ahead of next week’s Town Hall budget meetings, ANDREW PELLING, below left, looks at the fractures between local and national Tory politicians and questions the council’s decision to borrow another £300 million

Pelling at ParliamentNext Tuesday, the Conservatives who run Croydon Council will push through the borough’s budget in an extraordinarily rushed and truncated democratic process not seen in south London civic governance since the dark days of far left “Militant” Labour councils of the 1980s.

The council, under leader Mike Fisher, will push the budget through all its stages in just three hours, with the cabinet expected to discuss and review the densely packed 110-page document in just 60 minutes, before sending the package of proposals to a full meeting of councillors for rubber stamping.

The council is increasing Council Tax by the maximum amount it dares to, without falling into technicalities that would make Croydon obliged by their own Tory-led government to hold a referendum to endorse the increase, a referendum that local Conservatives say would cost up to £300,000 to stage.

The proposed Council Tax rate is the highest ever set in Croydon and makes Croydon the fifth most expensive council in London. Unlike Croydon, 26 of London’s 32 boroughs seem likely to freeze their Council Tax this year.

The Conservatives who run Croydon Town Hall rely on being seen by voters in the south of the borough as providing a low-tax offer. In the 1970s and early 1980s, Conservative-run Croydon Councils competed to have the lowest rates in London. Times have certainly changed.

The local Conservatives’ solution has been to put the blame at the door of their own party that is running the national government, as their frustrations about the grant that Croydon Council receives from central government, compared to that paid to inner London boroughs finally boiled over this week.

Thus we saw the nasty turns of phrase which Gavin Barwell, the Croydon Central MP, normally reserves for his many local critics being turned against his fellow Conservative party members, particularly those from inner London who draw admiration in national Tory circles for their efficiently run councils that cut or freeze Council Tax.

Inner London councils receive government grant at a rate of £718 a head, while Croydon receives only £332 per head. If Croydon had the same level of grant per head, and was better managed generally, then with a bit of effort it might be able to match what Conservative-run inner London Wandsworth council used to do, and charge no council tax whatsoever. But then, unlike Croydon, Wandsworth is not in the habit of awarding multi-million pound contracts to operate public services to the most expensive, least-good bidders.

Steve O'Connell: grant system is "untenable"

Steve O’Connell: grant system is “untenable”

The very busy Steve O’Connell is not only Croydon’s London Assembly Member and a councillor for Kenley, but he is also the local council’s finance spokesman. This week, in an interview on Croydon Radio,  he launched an attack against the government grant system, calling for it to be scrapped altogether as being “untenable”.

O’Connell even dared to accuse the local government minister, Eric Pickles, of turning “a deaf ear” to the issue.

Tim Pollard, Croydon Conservatives’ deputy leader and not someone usually prone to using extravagant language, turned the hyperbole dial up to 11: “We are staring into an abyss here, and it’s time we faced up to it.”

Pollard effectively admitted that Croydon’s Conservatives had been pushed beyond breaking point in trying to run a borough with many of the social issues of an inner London council when equipped only with the financial input from government of an outer London borough. “There is a time coming, and it’s not far off, when the costs of dealing with an ageing and increasingly deprived population will mean that there is literally nothing left in many councils’ coffers for anything but social care,” Pollard said with unusual frankness.

In contrast to Pollard’s measured style, Barwell – who still has close ties with the Town Hall, where he was a councillor until 2010 – was up to his usual intemperate and immature antics. Barwell lashed out when the ConservativeHome website’s Harry Phibbs had the temerity to ask if Conservative-controlled councils such as Croydon and Bromley were letting the Tory side down by raising Council Tax.

Thus, you had a website owned by Barwell’s former boss, Lord Cashcroft, decrying Barwell’s former council for breaking with Tory party policy on Council Tax, and having the temerity to castigate them for doing so as well.

Gavin Barwell: not happy about being lectured on how to run council efficiently

Gavin Barwell: not happy about being lectured on how to run council efficiently

Barwell blew. He decried Phibbs, the former Evening Standard hack, and his inner London Tory colleagues as “pathetic” for “denigrating more colleagues”.

“Like many Conservatives in outer London,” Barwell wrote, “whilst I admire what colleagues in inner London have achieved I’m pretty tired of being lectured by them.”

It seems unlikely that such a confrontational style will win many friends or influence people in Croydon’s push for an improved grant settlement.

Barwell – who too often throws out insults to residents in late-night Twitter spats – appeared panicked. Once again he demonstrated his poor political judgement when, in posting his comment, he predicted electoral doom for himself and other outer London Conservatives because of the government grant system.

“If the Party wants to hold outer London councils next year – and marginal outer London constituencies like mine a year later – it needs to wake up and smell the coffee and fast,” wrote the somewhat clichéd Barwell.

That seems a great exaggeration of the 2014 electoral prospects for Labour in Croydon  when, in all likelihood, the Conservatives need only to hold Waddon ward’s three seats to retain council control. And as far as the 2015 Westminster General Election is concerned, before Barwell was selected as the Conservative candidate, Croydon Central was in the top 200 safest parliamentary seats for the Tories in 2005.

Or does Barwell’s panicky comments reflect the deeper concerns being discussed within the Croydon Conservative Association? Because conceding that you are going to lose has always been considered to be dicing with political disaster at the polls.

Blaming the system is also not clever politics when Conservatives are in power at the three tiers of government – local, regional and national. If the cry is that things need sorting but we’re not capable of changing things even though we’re in power, then the electorate seems likely to be unimpressed.

Some analysis of their own performance since re-taking control of Croydon Town Hall in 2006 and proper self-criticism might come in handy for local Conservatives.

Their claim of civic poverty is severely undermined by their refusal to reveal the details of their risky £450 million property speculation on the rates, and the Byzantine financing of the £140 million council offices.

It may emerge that under the Conservatives, Croydon Council purchased properties by borrowing millions of pounds, but the banking crisis compromised the scheme by closing off cheaper financing, and this has proved to be a constant drain on council coffers.

The property-hungry arrangement appears to have driven the council into the most expensive bid for running the borough’s public libraries, as the property needs of the URV’s partner, John Laing, became more important than the financial considerations of running libraries.

Mike Fisher: has had wrong priorities for council spending

Mike Fisher: has had wrong priorities for council spending

Lack of progress on saving money through shared services with other councils and huge spends on consultants and on promotional publicity, all suggest that Fisher and his team have had their priorities all wrong, and that there is more to save at the Town Hall.

Croydon Council and the Croydon Conservative party’s joint campaign for a “Fair Deal for Croydon” ran into the sand long ago through poorly researched comparatives with other councils and an odd obsession with comparing Croydon with Ealing.

The last Labour government did recognise that the government grant system was hurting Croydon. Labour provided quite a large sticking plaster to the problem with a special grant under the Local Enterprise Growth Initiative: £77 million of additional money in the form of regeneration funding was promised.

Some of that cash did arrive in Croydon … until stopped by the Conservative-led government (although at times Labour had toyed with dropping the funding).

Croydon remains short-changed. The delays in receiving or using the post-riot recovery funding only adds to our borough’s woes. That post-riot fund, in any case, is very modest compared to the money that Margaret Thatcher showered on Brixton to aid its recovery following the riots there in the early 1980s, in the midst of a previous economic recession.

Fisher’s council turned up its nose at Enterprise Zone status for central Croydon, which with innovations such as ultra-fast broadband and other attractions for modern businesses, would have been worth more than the £23 million riots fund. Looking the EZ gift horse in the mouth has probably not helped Croydon’s pleas to central government for extra cash, either.

It seems very unlikely that a shift in the complex funding formula for local government finance will be secured in time for next year’s local elections. Government has failed to grasp this nettle at least since the 1970s. Croydon’s Conservative politicians will only have themselves to blame if they can’t make the case for Croydon well enough to win extra money.

And the Council Tax increase is only one headline detail in the Croydon budget, which proposes adding nearly £300 million of extra debt to the council books by 2017.

Under Fisher’s council’s “We are Croydon” vision, Croydon will be borrowing £282.31 million in addition to the extra £223.13m of debt taken on board this year to release Croydon from the national Housing Revenue Account which bled money out of Croydon’s housing funds.

We will have to wait to see whether this money, borrowed at historically low rates of interest, will be used for productive public infrastructure, or used to help the bottom line of a property developer, or pumped into funding schools that then get transferred to private charitable foundations.

  • Andrew Pelling was a Conservative councillor in Croydon from 1982 to 2006, was London Assembly Member for Croydon and Sutton from 2000 to 2008, and MP for Croydon Central 2005 to 2010
  • Inside Croydon: For comment and analysis about Croydon, from inside Croydon – 142,300 unique page views, Nov 2012-Jan 2013
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