CROYDON IN CRISIS: Can it really just be coincidence that the troubleshooter appointed to conduct an urgent review of the council also has extensive experience working at one of Jo Negrini’s former boroughs?
WALTER CRONXITE reports
It seems almost certain that Chris Wood will arrive in Croydon better briefed than most on the work of Jo Negrini and the multi-million-pound problems with her brainchild, Brick by Brick, the council-owned, loss-making house-builder.
Wood is the former local government executive appointed by housing minister Robert Jenrick to conduct an “urgent review” of Croydon’s omnishambles council.
An auditors’ report published last week confirmed that Brick by Brick, which has borrowed at least £200million from the council since it was registered in 2015, has yet to pay back a penny to Croydon. The auditors calculated that Croydon’s cash-strapped council is owed £110million in unpaid interest and unrealised profits from Brick by Brick.
And in Wood’s appointment letter, a senior civil servant at the Ministry of Housing, Communities and Local Government instructed him that his Croydon review will “look specifically at the council’s commercial and investment operation”.
Negrini was Croydon’s council CEO from 2016 until September, when she was last seen scurrying through the revolving doors at Fisher’s Folly with a £440,000 “golden handshake” stuffed into the pockets of her designer suit.
Negrini’s time in charge at Croydon coincides with some of the worst excesses of governance at the council as outlined in the Grant Thornton auditors’ report.
Wood and Negrini have both had spells working at Newham Council.
As Inside Croydon reported in January, the parallels and commonalities between Red Door Ventures and Brick by Brick are too many and too similar to be merely coincidental.
In his extensive CV, Wood lists being the CEO at Newham from 2006 to 2008 (a time when the east London borough was run by a directly-elected mayor, the Blairite “Sir” Robin Wales). There was no direct cross-over with Negrini: the self-styled “regeneration practitioner” worked at Newham as the borough’s director of strategic regeneration, planning and Olympic legacy from 2010 until January 2014 (when she joined Croydon).
After spells with various housing trusts and care home operators, Wood became managing director of the council-owned Red Door Ventures in May 2014. He left in 2016 but rejoined RDV in May 2018 for a one-year spell as the company’s chairman.
Wood’s letter of appointment for the Croydon review was sent on Monday by Catherine Frances, the director-general for local government at the MHCLG. The letter makes it clear that discussions over the review had been taking place with Wood for some time.
In her letter, Frances wrote, “I am writing to thank you for agreeing to lead a rapid non-statutory review at the London Borough of Croydon. The review is in order to provide support to the council as well as assurance to the Secretary of State, and of particular relevance is the council’s request for exceptional financial support. The review will also look specifically at the council’s commercial and investment operation.”
The letter sets out Wood’s terms of reference. Wood is conducting the review helped by Alan Gay on financial aspects and a private sector consultant, Boris Adlam, looking at the council’s commercial operation. As well as Brick by Brick, this seems likely to examine aspects of the council’s purchase of the Croydon Park Hotel and Colonnades.
Wood and his small team have been given until late November to submit their report.
“The current situation at the London Borough of Croydon has been cause for concern for some time,” Frances states in the letter.
“Their papers and the debate at the council meeting on 28 September…”, which was where 39 Labour councillors loyally, but misguidedly, voted against a motion of no confidence in the then council leader, Tony Newman, “… set out all too clearly how serious the position is. In summary, the council is currently forecasting a shortfall of over £50million for the current financial year (2020-2021). Their medium-term forecast financial planning also points to significant reoccurring shortfalls in future years and there have also been persistent criticisms of the council’s approach to commercial investment.
“In line with recent communications from the government, the council has contacted the Department to express concerns with regard to their financial position as well as indicating that government support will likely be necessary to recover. I welcome their openness and agree that the time has come for an independent non- statutory review, into not only what is necessary to support the council as they seek to improve, but also to understand better any broader issues underlying the current position.”
In her letter to Wood, Frances continued: “I am grateful to the council for agreeing to this as a way of demonstrating their commitment to addressing these challenges and starting their improvement journey. We have agreed a range of themes for the review, reflecting the lessons we have learnt and published about organisational culture and governance from recent interventions.”
This “range of themes” may cause some concern among those who have been in charge at Fisher’s Folly these past few years. Frances lists them as:
- Governance eg. sense of strategic vision and direction, adequate internal processes; key senior posts filled with permanent appointments.
- Culture and leadership eg. positive and open relationships between councillors and officers, and openness to challenge.
- Financial stability eg. ability to stick to budget plans; clear plans for closing identified budget gaps.
- Services eg. reports from inspectorates, regulators or ombudsman.
- Capacity and capability to improve eg. acknowledging problems and engaging with sector support; evidence that attempts at improvement (possibly with sector support) have been effective.
Whitehall has also some specific Croydon areas which, Frances tells Wood, she “would particularly like you to explore”:
- What level of confidence can the MHCLG have on the council’s assessment of its financial position, particularly its estimate of their budget gap, for 2020/21 and 2021/22?
- What level of confidence can the department have in the council’s plan to mitigate pressures; including the delivery of necessary savings, the existing resources that can be deployed, and their ability to afford borrowing?
- A view on the council’s assessment of future financial risks and adequacy of their plan (or ability to plan) to manage those risks.
- A view on the council’s approach to mitigating their budget gap under different scenarios for how much financial support is provided.
- What level of confidence the department can have on the council’s assessment of wholly-owned companies, including the viability of companies to continue without any additional Council funding or loans?
- How adequate or achievable is the council’s response to the recently commissioned ‘Strategic Review of Group Companies’?
- How robust are any forward-looking commercial strategies/plans and their longer term approach to borrowing and investment?
- A view on whether the council’s oversight and management of commercial and investment risk feels adequate or fit for purpose.
Much of Wood’s task will be to pull together the various strands of existing reviews and reports, such as the Price Waterhouse Coopers examination into the council’s various companies, the finance review from Ian O’Donnell (which found 75 examples of the council’s governance not being in line with best practice), and, of course, the damning auditors’ report.
“At the end of your work,” the Whitehall chief wrote to Wood, “you will provide a report to the Secretary of State setting out recommendations for next steps including possible further action by the Department.
“If appropriate, your recommendations will underpin a package of targeted support lasting up to two years. The latter should be supported by a robust improvement plan owned by the council, which will help the London Borough of Croydon to address the concerns you have identified and ensure they are meeting their Best Value duty.”
Read more: Jenrick orders urgent inquiry into ‘unacceptable’ council
Read more: ‘Tony Newman always has been a coward’
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