Croydon’s Tories have been crowing loud in recent days over the failure of the Labour-controlled council, but they might need to temper their politically-charged triumphalism somewhat, given that Bexley has now also gone to the government with a begging bowl.
Bexley, as you might guess, is Conservative-controlled.
Last week, Croydon became only the second local authority in 20 years to issue a Section 114 notice – effectively admitting it is broke. The previous English council to issue a S114 was Northamptonshire in 2018 – a county council that was run by the Tories.
Bexley made the decision to seek a capitalisation direction – much as Croydon is doing – at a cabinet meeting this week, to fund day-to-day spending in the face of “unprecedented” savings requirements.
Bexley faces an overspend of almost £14million by 2024-25, equivalent to nearly 10 per cent of its net budget, according to the Local Government Chronicle.
Oddly, the Conservative-run borough has little more than £10million in its general fund reserve, something that Bexley’s auditor had already recommended should be increased. Much like nearby Croydon.
According to the LGC: “The council was already in a challenging financial position before covid hit and in February was forecasting a £20million overspend in 2021-2022, which has since been reduced to £13.25million following the early fulfilment of savings plans. Spending controls introduced in 2019-2020, including a ban on non-essential expenditure and corporate leadership team oversight of all recruitment, are set to continue this year and into next.” Which all sounds very much like Croydon.
Bexley council says that it is seeking a capitalisation direction from the Ministry of Housing, Communities and Local Government that would provide them with “sufficient head room and contingency to manage the financial uncertainty and will not need to be utilised in full if accepted.
“The council does not take this approach lightly, but it is conscious of its financial duties to manage the council’s finances effectively and efficiently, to set a balanced and sustainable budget for 2021-2022 and continue to provide the much-needed services to our residents.”
Bexley – which includes the former parliamentary seat of the Tory Prime Minister, Edward Heath – say they expect a decision from the Whitehall mandarins in eight to 10 weeks.
What might be of particular interest to Croydon Tories such as Jason Perry, the opposition leader at the Town Hall, Croydon South MP Chris Philp and former Downing Street SPADS Mario Creatura and Jason Cummings is that Bexley blames its financial predicament on the delay to the Conservative government’s fair funding review which had been due to introduce new distribution for council funding next April.
The Treasury’s decision not to conduct a multi-year spending review had “hindered the council’s ability to undertake long term strategic financial planning”, a Bexley council report stated.
Teresa O’Neill, the leader of Bexley council, said, “We have to plan based on what we know now, including the potential impact of the covid pandemic, which creates more uncertainty.”
Bexley also says that, as with Croydon and dozens of other local authorities, its overspend in this financial year (estimated at £7.2million) is in large part because of the government’s failure to honour promises given in March and April to cover additional expenditure and lost income due to coronavirus.
The other half of Bexley’s overspend, it says, is due to service pressures, such as an increase in demand for temporary accommodation. Much like Croydon.
Council jobs in Bexley will be axed as well as a review of contracts to identify any potential savings. A lot like in Croydon.
The Bexley council report states: “The level of saving, efficiency and transformational opportunities for 2021-2022 is unprecedented in the council’s history.” Exactly like Croydon.
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