EXCLUSIVE: Our Town Hall reporter, KEN LEE, on the unhappy consequences of the council’s poor management that has created ‘the perfect financial storm’
Croydon Council is to launch wide-ranging consultations tomorrow, July 1, as it begins what in councilspeak they like to describe as a “restructuring”, but what in plain English will mean that more than 500 council staff will be losing their jobs in the next few weeks.
Less than two weeks ago, Tony Newman, the leader of the Labour-run council, was promising, “We are taking all the necessary steps possible to protect the key front line services that our most vulnerable residents depend upon.”
Yet Newman now faces some uncomfortable conversations with union shop stewards and his councillors over the scale of the cuts being proposed.
The 15 per cent reductions in staff are the price to be paid for the coronavirus cash crunch that the council found itself in after spending more than £80million to deal with the immediate demands presented when confronted with the emergency. According to the council, even after receiving £20million in emergency finding from Whitehall, Croydon has a £62.7million-sized hole in this year’s budget.
The narrative from Fisher’s Folly is that this is not their fault, and the job cuts are a consequence of Boris Johnson’s Tory government failing to honour its pledge, made back at the start of the pandemic, to “do everything it takes”.
But sources inside Fisher’s Folly suggest that the offer of redundancy packages under this enforced “restructuring” will see the council shed some of its highest-paid staff. “Several executive directors are heading for the exits already,” was the view of one council insider.
Under chief executive Jo Negrini, Croydon now has more staff on six-figure salaries than at any time in history, with three of them paid more than £200,000 per year. That includes Negrini herself, whose £220,000-plus package (including at least £10,000 as the borough’s returning officer) has increased by 22 per cent since she got the top job just four years ago.
While according to the latest figures available from the council there are now 10 people on the executive floors of Fisher’s Folly who are paid, gross, £10,000 per month, the average salary of the council’s 3,600 staff is just £22,000 per year.
It is anticipated that it will be these employees who will carry the brunt of the job cuts.
Newman and Negrini have been spinning for all they are worth over the past two weeks to try to pass the buck for the parlous state of the borough’s finances.
But in the past month, outside auditors and finance directors from other London boroughs have had to be drafted in urgently to try to sort out the mess at a council which had already built up a £1.5billion debt mountain even before coronavirus came along, and where its reserves had been run down over the past four years.
At the weekend, the Institute for Fiscal Studies issued a report in which Croydon’s preparedness for an emergency – the council’s “resilience” – compared unfavourably with most other local authorities.
The reality, though, is that these further job cuts come after a decade of austerity which has seen round-after-round of “restructuring” carried out by Tory and, more recently, Labour-run Town Hall administrations, often with disastrous effects – such as when the children’s services department was so understaffed that Ofsted inspectors reported that youngsters in the council’s care were are serious risk of harm.
The post-covid future for Croydon could see an end to pretty much all “non-essential” or non-statutory services provided by the council.
In an interview given to the Local Government Chronicle, Negrini said, “Local authorities have unfalteringly spent millions extra in our commitment to do everything we can to protect residents. Yet, despite their pledges in March, ministers have yet to fairly compensate us.”
But the very well-paid chief executive then let slip that cost-cutting was already being planned before coronavirus: “Local government was already underfunded before covid-19 and most councils had savings plans,” Negrini said.
“The pandemic now means we’re all spending more but are unable to generate income to help pay for these extra services or to make the savings we need, creating the perfect financial storm.
“As a result, councils nationwide are reporting a significant covid-19 financial shortfall – London Councils estimates £1.3billion across the capital alone. In Croydon, our figure is £62.7million.
“We can’t just assume we’ll be fully reimbursed for our covid-19 work, so we’ve had to act. We are undertaking an urgent review of our finances and have pulled together a comprehensive plan to make sure we can get through this.
“Earlier in lockdown we established a finance review panel… this panel is looking at every aspect of our spending, future savings and income ahead of our revised medium-term financial strategy next month.
“We know there is a battle ahead. We’ll have to make some incredibly difficult decisions that include cuts to services and staff, and we will have to comprehensively change how we work – but it has to be done to protect essential local services.”
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