In £100m black hole, Labour’s opted not to dig their way out

WALTER CRONXITE reports on Croydon Labour’s first council Budget for eight years, and finds them deferring much of the pain of dealing with the Town Hall’s “financial black hole”

Croydon’s Labour council yesterday revealed its 2015-2016 Budget, which falls well short of delivering the required cuts to deal with the £100 million “financial black hole” legacy of Mike #WadGate Fisher, something the financially embarrassed former Tory leader boasted about when he lost office in May.

Micawber-like, Tony Newman is hoping "something will turn up"

Micawber-like, Tony Newman is hoping “something will turn up”

Not for the first time, Labour’s council leader Tony Newman seems to have tried to postpone the more painful decisions, in the Micawber-esque hope that something will turn up.

Next year’s projected net reduction in annual spending of £17 million leaves the council well behind the £33 million a year “target” it needs in each of the three remaining financial years of their term in office if they are to realise the required savings before seeking re-election in May 2018.

The net reduction in spend is less, even, than the £19.5 million reduction in basic government grant for Croydon Council next year. Labour’s first full Croydon Council Budget in eight years is using £3.5 million from accumulated savings garnered by the previous Conservative council.

In the autumn, the talk from Labour’s finance Cabinet member Simon Hall was of having to axe 500 council jobs; the first tranche of redundancies this year will be measured in dozens, rather than hundreds. That might help keep the unions quiet for a bit.

Looking over the three years, Labour only identifies a further net savings of a little more than £18 million, leaving them £65 million short of target on required savings.

Labour look like repeating the same incapacity to take tough decisions that eventually led to the crisis Council Tax increase of 27 per cent the last time that they held power in Katharine Street.

Having announced a freeze in Council Tax for next year, the delay in making cuts in council spending looks like it is being driven by the electoral cycle, as Labour tries to unseat Tory Gavin Barwell from his marginal Croydon Central parliamentary seat in May. A promise to splash the cash to build a pool in New Addington looks to win a few more votes. Labour are closing the run-down pool in Purley (to avoid spending £750,000 on refurbishment) and are delighted that Barwell has committed the unforced error of criticising that loss of service in the Croydon South constituency, which is where he lives. Caring about leafy Croydon South cuts little ice with voters in Croydon Central.

Fisher's Folly: Built at a cost of £144 million, plus £80m interest payments, the council's head offices seem likely to be a drag on borough finances for years to come

Fisher’s Folly: Built at a cost of £144 million, plus £80m interest payments, the council’s head offices seem likely to be a drag on borough finances for many years to come

By delaying the deepest cuts, deferring the worst of the pain, it seems Labour are hoping that they will never have to find all of the required £100 million of savings. Are Croydon Labour trying to convince themselves that a new Chancellor, Ed Balls, might ride to their rescue? That might be a tad delusional… for while Labour may well win control of the government after a single term in opposition, any local authority funding help seems certain to be sent north.

Croydon Labour also hopes that they will get extra income from new homes and new businesses, although the disruption from emptying out the Whitgift Centre for redevelopment will more likely reduce business rate income, part of which the council can retain if new businesses are created.

Labour appears to believe that their “Our Time Is Now” campaign for government to devolve more of the extra income from new development and stamp duty will pay dividends in Croydon.

Residents must hope that, for their own sake, Labour’s dreams become reality, as the rate of savings in years three and four of the council will now have to be £41.5 million a year if there’s not a financial surprise from the tooth fairy turning up under Newman’s pillow overnight.

One thing not mentioned in the Budget papers is a Council Tax freeze in 2016-2017. Silence surely indicates that there must be a Council Tax increase coming. However, with Council Tax increases capped at 2 per cent, this offers the council the prospect of only £2.65 million extra.

Cuts in quality of service to the needy are hidden behind soft words about retendering of contracts – often code for reduced service provision. Or for efforts to bring back in-house some services, something which surely could only be done if cost savings can be delivered.

Residents trying to get through on the council’s telephone “hot line” will notice the office closing 45 minutes earlier each day. The council will now only pick up the phone from 9am till 4pm on weekdays.

An “easy” cut of £100,000 per year is being made by axing the second mayoral car. Who knew we needed two mayoral cars? Two jobs will be lost as a result, while the deputy mayor will in future have to hitch a lift with the mayor or take the tram.

The borough’s capital budget is still impressively large at £327.5 million over three years. And there is a hint of much more to come in February through the council’s declared intention to go into the development business. Look for the council to borrow even yet more money, this time against its assets, including those school playing fields that the council says are and are not for available for development.

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5 Responses to In £100m black hole, Labour’s opted not to dig their way out

  1. I can find £1.6 million in council Budget cuts straight away. Councillors who have full-time jobs don’t need extra income from the tax-payer. Councillors who don’t have other sources of income can claim their allowance.

    Mike Fisher resigned (perhaps asked to leave due to conflict of interest) his highly paid full-time job at the Home office when he was leader of the council.

    On this point I agree with the trade unions in Croydon.

  2. KristianCyc says:

    Another easy 100k, axe the mayoral car

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