The council’s £220,000 per year chief executive has ‘Whitehall looking over her shoulder’, reports KEN LEE
The grumblings of discontent around Fisher’s Folly among the hundreds of council staff who face redundancy have been partially relieved with the discovery that chief executive Jo Negrini’s cost-cutting “reorganisation” plan still needs to go to meet with the approval of the Ministry of Housing, Communities and Local Government.
“We are in special measures, and Whitehall is looking over Jo Negrini’s shoulder,” was how one disenchanted staffer put it this week.
“It just shows that we’re under a Section 114 notice in all but name.”
Council staff this week circulated angry emails accusing their bosses of “cowardice” for axing hundreds of jobs while preserving their own positions and six-figure salaries.
Among those singled out for criticism were Negrini, who is paid more than £220,000 per year as CEO, and her close colleague Jacqueline Harris-Baker, the lawyer who, despite her lack of local authority accountancy experience, Negrini promoted 18 months ago to take charge of the borough’s finances.
“If the council had actually issued a S114 notice, there would have been no way of Jo or Jacqueline surviving in their jobs, or council leader Tony Newman saving his political career, either,” the Fisher’s Folly insider told Inside Croydon.
A council issues a notice under Section 114 of the 1988 Local Government Finance Act when it can no longer pay its bills. Effectively, it is the formal way a council declares that it has gone bust.
In the past 20 years, only one local authority, Northamptonshire County Council, has needed to resort to S114 measures, which include calling in outside auditors and council finance experts to manage the books (which Croydon did in May), a freeze on spending (which Croydon has done), a recruitment freeze (Croydon’s had one of those since January) and to deliver a plan for on-going management, which has to be sent to Whitehall for approval (as it appears Croydon has to do).
Balancing the budget is a statutory duty for chief financial officers of local authorities. In the first six weeks of the coronavirus emergency, Croydon overspent its budget by more than £62million. The council had gone into lockdown with debts of £1.5billion and reserves down to just £10million (“I’m more concerned about our level of reserves than our level of debt,” Negrini had said, somewhat casually some might consider, in an interview in January).
As Inside Croydon has previously reported, despite Croydon and dozens of other councils in England overspending by billions during the covid-19 pandemic, remarkably not one local authority has issued a S114 notice. But that’s largely because Whitehall and the local government accountancy body sealed a deal in May to avoid such actions.
According to a senior figure in local authority finances, the local government ministry feared that if one council issued a S114 notice, many others would swiftly follow. They said that Robert Jenrick’s Ministry of Housing, Communities and Local Government, “…could cope with one or two S114 notices, but they wouldn’t be able to deal with 20 or 30”.
In Croydon, the council called in the external auditors and finance directors in early May, and it has blocked all non-essential expenditure and is implementing 15 per cent budget cuts across the board – all the sort of emergency measures that you would expect a local authority to take if it had issued a S114 notice.
Negrini and Newman, meanwhile, keep stressing that Croydon has not had to issue a S114 notice. That’s probably because that council chief execs and council leaders who allow their authority’s finances to collapse don’t usually survive very long after admitting to the calamity caused on their watch.
“Who do they think they’re kidding? By the way, has anyone even seen Tony lately?” our insider asked, apparently out of concern for the council leader.
“Because the hard-working council staff and union members who worked all through the pandemic lockdown certainly haven’t seen anything of him since we started our redundancy process.”
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