Is Croydon on the brink with £1 billion borough debt?

Four articles and announcements have appeared in the past few days, all apparently unconnected.

Croydon Council: has managed to run up £1bn debts under current Tory administration

Croydon Council: has managed to run up £1bn debts under current Tory administration

Yet if the strands of the four stories are drawn together, they illustrate how badly run is Croydon Council, negligently wasting vast sums of public money – our money – through its secretive £450million (at least) Urban “Regeneration” Vehicle deal, the so-called CCURV run with builders Laings.

No one outside council leader Mike Fisher’s inner circle has been allowed access to the hard details of the CCURV deal and what it is really costing the people of Croydon. But the council’s own figures show that we may soon find ourselves living in a borough with a £1billion  debt.

With the ConDem government committed to ever more cuts to spending on local authority services, it is not overstating matters to suggest that Croydon Council could be staring at the financial abyss.

STORY ONE: The government published figures last week to confirm what many already suspected, that homelessness in Croydon has reached record levels, with nearly 1,000 families requiring council help to put a roof over their heads.

Unfortunately for them, as the BBC Newsnight programme exposed, Croydon Council manages to put many of these people, including families with small children, in sub-standard accommodation which is illegal under government rules.

STORY TWO: Residents in Coulsdon in the south of the borough have been receiving letters from a flash PR agency based in the City of London regarding plans for the disposal of Homefield House.

Homefield was a council-run residential care home which was closed, despite objections from the families of those staying there and of local residents. In another example of Croydon Council handing public property over to the private sector, Homefield has been given to Laing as part of the CCURV scheme.

Laing and house-builders Redrow Homes want to build seven large houses on the site of Homefield. These are the sort of high-yield properties which house-builders like to turn-round quickly for a fast buck. Or in this case, probably millions of bucks.

Croydon's Mike Fisher: has overseen the borough build up a vast debt

Croydon’s Mike Fisher: has overseen the borough build up a vast debt

But there will be no smaller properties suitable for first-time buyers or older locals looking to down-size, and definitely no mention of any council homes which might help reduce the obscene levels of homelessness within our borough.

Residents in a very localised area of Old Coulsdon have been invited to attend a consultation to be staged at the Oasis Academy on Homefield Road from 4pm-8pm on Tuesday, June 18. Presumably, any Croydon Council Tax-payer could have a view on how this piece of public property is being disposed.

The swanky PR agency, Green Issues, that is handling this self-satisfying consultation has appointed someone called Emma Webster to run this process on behalf of the builders. Webster, her employers boast, has “been responsible for consultation programmes on many challenging and contentious schemes, including many sites for Tesco”. Not everyone would see that as an altogether good thing.

There’s more. Emma Webster happens to be a Conservative councillor on a local authority in Berkshire. Sound familiar?

Another firm of house-builders based in south London which has used the same PR company has said, “Green Issues make a significant difference to our ability to win planning approvals. They understand the politics of an area and are very proactive in engaging with all the local players – helping us to shape the local agenda.”

A borough under the influence of public relations firms and lobbyists, working for the profits of builders. Ever feel like you’re being played, people of Croydon?

STORY THREE: So we have record levels of homelessness, and public property being redeveloped for private profit with little or nothing being done to provide new council homes.

This could have nasty consequences for Croydon Council, according to another report in The Guardian newspaper, which says that the Conservative-led government is promising to “crackdown” on those local councils – such as Croydon – who keep homeless families in bed and breakfast accommodation for longer than the legal maximum of six weeks.

The announcement by Tory minister Mark Prisk is exactly what you’d expect a politician to say. Yet Prisk punishing the local authorities, for the consequences of his own government’s changes in housing benefit policy, seems particularly perverse, even for this Conservative-lead government.

Tory-run Croydon is not the worst offender when it comes to keeping families in inadequate bed and breakfast accommodation longer than the legal limit. In Croydon, there’s 49 families living in cramped, squalid and often unhealthy conditions in B&Bs around the borough. London boroughs, where housing costs are the highest in the country, figure prominently in the government’s statistics, as nationally homelessness has reached a five-year high.

“This rising tide of homelessness is a direct result of cuts to housing benefit … when there is a chronic lack of affordable housing and rents are rising,” Leslie Morphy, the chief executive of the homelessness charity Crisis, told The Guardian.

“It makes more sense and is more cost-effective to help people stay in their homes than spend far more money on temporary accommodation or support once people become homeless. With more cuts to housing benefit kicking in, we can sadly only expect things to get worse.”

That’s bad news for all of us in Croydon, who will end up footing the bill. According to The Guardian, nearly £2 billion has been spent by local councils across Britain on all forms of temporary accommodation for homeless families since 2009.

STORY FOUR: Margaret Hodge, the veteran London MP, chairs the Public Accounts Committee to great effect at Westminster, and in a report published on Thursday, she helped to highlight why councils such as Croydon might be coping so poorly with problems such as chronic homelessness.

Margaret Hodge: her all-party committee of MPs predicts financial crisis for local authorities

Margaret Hodge: her all-party committee of MPs predicts financial crisis for local authorities

According to Hodge’s PAC, dozens of local authorities are on the brink of complete financial collapse, but central government is stubbornly refusing to act to help them prop up vital services.

Councils are at the brink of a financial abyss, according to the Public Accounts Committee report, which follows warnings from the National Audit Office that 1 in 8 councils are at risk of being unable to balance their budgets and nearly 1 in 10 are under “high financial stress”.

It seems increasingly likely that Croydon Council is in that bottom 10 per cent of local authorities.

The PAC, made up of MPs from across all parties, said the government should draw up contingency plans to intervene in the event of multiple financial failures. Hodge said ministers were cutting funding to local authorities by more than 25 per cent over four years, without any thought for the consequences on local services.

She said that government departments’ work in this area had been “superficial and incomplete”. Every action has a reaction, even in government policy. According to Hodge, not enough work has been “carried out across government departments to determine how funding reductions in one area of spending might affect services in another: for example, how cuts in local authority adult social care might lead to bed-blocking in hospitals”.

Hodge warned that some councils have already cut their services to the bone, with nothing left to cut. “In the long-term there might well be little room for further efficiency gains and services would have to be cut,” Hodge said. “There needs to be frank and open dialogue between central and local government and the public on just what services councils will be expected to provide in a prolonged period of declining funding.”

The central government grant to councils is being cut by 14 per cent by 2015  – on top of all of the cuts that have already been implemented. Things could be made worse still, if inflation increases councils’ costs and if Council Tax income falls below predictions. Croydon, after all, does not have a great record when it comes to collecting Council Tax.

In Croydon, in a report that went to the council cabinet in February, officials suggest that the Town Hall will soon accumulate total debts of £2,765.55 per person in the borough.

That all adds up to £1.005 billion.

It includes nearly £300 million of extra debt loaded on to the council books by 2017, on top of £223.13 million of debt taken on board this year by council leader Mike Fisher’s Conservative council.

No wonder they can’t afford to home our homeless, keep our roads well made, run our libraries properly, or even to fulfil the financial commitments they have made for the Fairfield Halls, without resorting to flogging off the borough’s heritage.

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News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email
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3 Responses to Is Croydon on the brink with £1 billion borough debt?

  1. derekthrower says:

    The chickens are coming home to roost.

    When a local authority completely makes its business the pursuance of speculative private gain, it is clear that the wider public interest is being ignored.

    The evidence points to an unviable form of local government and finance has been developed. The shame is that we know the response of central government already. More of the same.

  2. Even if this is true the amount is much less debt than what labour left us in 2006 after a 27% council tax increase which of course included salaries/ allowances of 1.6m for councillors who who probably had no other source of income.

    Sadly the Tories who took over couldn’t bring this increase down to the same levels as before though they have not increased the council tax by much.

    Perhaps the editor of InsideCroydon should be the Labour group leader to show some leadership and challenge the Conservatives.

    • The figures we cite are council figures (as we reference in the piece if you bother to read it, Patrick). So if the £1.005bn figure is wrong, we suggest that you blame Croydon Council. We would.

      You are wrong in your facts regarding the amount of debt left by the previous administration in 2006, though thank you for giving us an opportunity for highlighting that the council administration run by your friends in Croydon Conservatives was actually just £169 million – again, according to official council figures.

      That’s right: in 10 years (to 2016), Croydon’s Tories will have increased the council’s debt from £169m to £1,005m.

      The debt left in 2006 has been increased more than five-fold by this shambles of a council under Mike Fisher, Dudley Mead (an accountant, FFS) and Tim Pollard.

      You make the same, tired old point about the Council Tax increase under Labour of 27 per cent.

      But since the Conservaties were elected in 2006, they have never reversed that 27 per cent increase. On the contrary, they have endorsed it six times until this year, when they opted to INCREASE Council Tax.

      Not sure what point you are trying to make about allowances, though, Patrick: it was Mike Fisher’s Tories whose first act on being elected in 2010 was to (guess what?) increase the allowances that they pay themselves. Treble all-round!

      And flattered as I am at your nomination, not sure that you are qualified to make it nor I to accept.

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