Costs of covid-19 not the cause of financial collapse, says Ali

CROYDON IN CRISIS: After three weeks in the job, Hamida Ali admits that it was the Labour administration’s own errors, and not extra spending on coronavirus, that has led to the issue of the Section 114 notice.
By KEN LEE, Town Hall reporter

Hamida Ali: ‘the council has made mistakes’

Hamida Ali, the leader of Croydon Council for less than one month, today admitted that the Town Hall’s financial problems were long-term and deep-seated, and she refused to use the millions of pounds of extra spending during the coronavirus pandemic as an excuse for the administration’s failures.

“We need to be honest about the fact that, for a number of reasons, the council is on track to spend more than we have,” Ali said in a statement issued this evening, shortly after the council’s chief finance officer, Lisa Taylor, had issued a Section 114 notice – the formal admission that the council is broke.

According to the council today, the latest estimate of the council’s overspend this financial year is £66million.

Last week a “clarification” of guidance issued to CFOs, such as Taylor, made it clear that local authorities might escape having to issue S114 notices only because of the cost of covid-19, and Croydon’s problems are far more widespread than that.

Ali said, “The covid-19 crisis and a decade of austerity have had a major impact on our finances, but it’s clear the council has also made mistakes, and I am committed to fixing that.

“We know that we cannot do this alone and we want to work in partnership with everyone with a stake in Croydon’s success. That includes seeking financial support from the government. Today’s Section 114 notice is a part of making that case.

MP Chris Philp: ‘Labour has bankrupted Croydon’

“While we continue to work hard to find savings, we must focus our spending on essential services and protecting our vulnerable residents.

“We’re not going to fix these problems overnight and there will be difficult decisions ahead but I want to reassure local people that the council will still be here to support you.

“My priority is rebuilding a financially sustainable organisation, which provides the value for money and high-quality services that residents deserve.”

It was not long before the Labour-run council’s political opponents were on the case.

“Labour has bankrupted Croydon through poor financial control, running up £1.5billion in debt and engaging in disastrous commercial property speculation,” Croydon South Tory MP Chris Philp tweeted, apparently unaware that his Conservative colleagues had left £1billion-worth of debt when they lost control of the Town Hall in 2014.

Jason Perry, the leader of the Conservative opposition at the Town Hall, tweeted: “There have been many sad days of late, but it’s finally happened. Labour have bankrupted Croydon. They have mismanaged this borough for years with lack of control, playing monopoly, borrowing £billions and plundering reserves.”

Read more: What is a S114 notice? What will it mean for the council?
Read more: Jenrick orders urgent inquiry into ‘unacceptable’ council
Read more: Brick by Brick has paid nothing to council
Read more: Council ignored five warnings on reserves
Read more: Council staff ‘are angry, upset and want answers’

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3 Responses to Costs of covid-19 not the cause of financial collapse, says Ali

  1. Good grief! A flicker of honesty from the top in Croydon at last! Hooray.

  2. Bob Smith says:

    I do hope that this new honesty and transparency leads to the surcharging of the councillors and officers responsible for this disaster.

  3. Eer, I think we already knew we were in ‘deep doodies’ long before Covid Hamida. Now we see the vultures circling.

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