‘Croydon has not so much overspent as bet on losers,’ according to The Times today. KEN LEE reports on how, belatedly, the collapse of our council has finally become national news
The Thunderer has spoken.
It is fair to say that the Murdoch-owned paper is not impressed.
The only wonder is that it has taken them the best part of four years, and the council’s Section 114 notice on Wednesday, for them and the rest of national press finally to catch up with what The Times headline calls a “Rotten Borough” (in fairness to Lord Gnome, his magnificent organ Private Eye has been covering the Croydon crisis from the very start, in their excellent, ahem… Rotten Boroughs column).
The Times leader refers to an article (behind their paywall) in the paper’s news pages co-written by their consumer affairs correspondent, Andrew Ellson, a former colleague of Steven Downes this website’s editor, and therefore clearly a journalist of the highest standing.
“Speculative bubbles always burst, in part because of the ignorance of those who rush to invest without due heed to risk,” The Times’ leader writer states, with all the wisdom that comes from making an assessment after the event.
Referring to the cost pressures on councils created by the covid-19 pandemic, The Times says that even those problems (around £70million-worth in Croydon’s case), “can neither explain nor excuse the effective bankruptcy” of our council.
“Croydon’s fate was not inevitable,” the Thunderer… well, thunders.
Croydon’s “culture of profligacy far predates the pandemic and cannot be explained away by austerity or the area’s high demand for social care,” they write.
“In reality it is a victim only of its own misjudgment. Last month auditors savaged its ‘collective corporate blindness’, unsustainably low reserves and failure to scrutinise poor spending.
“What ultimately did for Croydon was the £545million it borrowed to fund investments in property, which left it in no shape to weather a crisis. It paid £30million for the freehold of a four-star hotel, since bankrupted, bought by the council leader under delegated powers. Another £46million went on an out-of-town shopping centre. Brick by Brick, the council’s housing firm, was lent £200million to build homes that offered no financial return to the council. Much of that was itself borrowed money.”
It should make for a painful read, especially for all the borough’s councillors, Tory as well as Labour. “The list of blunders, all of them avoidable and none robustly challenged by decision-makers, goes on and on.”
The Times says, “To characterise such decisions as somehow necessary would be laughable were the deeper problem they reveal not so serious. The commercial and residential property markets were volatile even before the pandemic upended the world of work. So too shopping centres, whose values have been falling in the face of shifting consumer habits. Croydon has not so much overspent as bet on losers. It was never justified in gambling public money so recklessly. The intention may have been to alleviate financial pressures but the result is that they have been exacerbated to breaking point.”
Together with the Bureau of Investigative Journalism,The Times, and Ellson, have since 2017 been reporting the casino economics entered into by local authorities around the country, notably Spelthorne in Surrey and Thurrock in Essex. Neither of those councils, though, has gone broke. Perhaps neither has had Croydon’s misfortune of being run by incompetents, clowns and naciscists.
“What began as a strategy to generate revenue without squeezing funds on services, often fuelled by Treasury loans, has left local government over-leveraged and without a safety net for harsher economic climes,” The Times states censoriously.
“Shopping malls, car dealerships, hotels and office developments would be imprudent investments for most commercial businesses, let alone authorities with obligations to provide essential services.”
Read more: Council forced to declare itself bankrupt
Read more: £36m Brick by Brick ‘risk’ helped to trigger Croydon’s S114
Read more: ‘Tony Newman always has been a coward’
Read more: Jenrick orders urgent inquiry into ‘unacceptable’ council
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