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Croydon In Crisis: Government to take charge of council

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EXCLUSIVE: Tory minister expected to appoint an ‘improvement board’ to oversee the running of the borough. By STEVEN DOWNES

Robert Jenrick: doesn’t trust Croydon to manage itself out of the financial crisis

The hopes of senior Croydon politicians to retain some control as they try to manage the council out of its financial crisis are set to be dashed, as Robert Jenrick, the Conservative Government minister, is expected to announce the appointment of an improvement board to oversee the running of the bankrupt borough.

According to senior sources at Fisher’s Folly, the move by Jenrick and the Ministry of Housing, Communities and Local Government is to be much like the steps they took last month over Nottingham City Council.

Those moves followed Jenrick ordering his own rapid review of that council’s financial difficulties, just as he has done with Croydon. The significant difference between the plight of Nottingham and Croydon is that the south London borough’s financial position is far worse.

“No one will be completely surprised if Jenrick decides to do this,” a Katharine Street source said this morning. “After all, everything he’s had reported back to him shows that the council’s directors couldn’t run a whelk stall.”

Last month, when announcing the improvement board for Nottingham, the MHCLG said, “An Improvement and Assurance Board, made up of experts in governance and finance, appointed by the department, will be set up to help the council deliver the report’s recommendations on governance and company ownership…

“… Councils have a duty to manage taxpayers’ money responsibly and are held to account where they are found to have failed to do so. The review team… found that the council’s financial strategy and commercial investment decisions over the past four years have resulted in a very significant budget gap and low levels of reserves.”

Sound familiar?

In Croydon, the council issued a Section 114 notice in November, an admission that it could not balance its budget for the current financial year.

After eight months of emergency spending on covid-19 measures, Croydon’s low reserves of just £7million were insufficient to cover the £66million budget shortfall, which had been caused in large part by the failure of the council’s housing company, Brick by Brick, to make any repayments on loans, any interest payments or profits.

Not in control: council leader Hamida Ali

Croydon is only the second local authority in 20 years to issue a S114 notice. When Tory-controlled Northamptonshire County Council went bust in 2018, the government took control by appointing commissioners to run the authority and lay down plans to break it up.

Last month, Croydon submitted its recovery plan to Jenrick’s civil servants, in the hope that they will provide a massive loan to bail-out the Labour-controlled council. The plan included appointing their own improvement board.

But as happened in Nottingham, this is likely now to be wound-up and a MHCLG-appointed board installed in its place.

It means that, effectively, all decisions and power will be taken out of the hands of the borough’s elected councillors. It will be a huge set-back to Hamida Ali, the old-new leader  of the council.

Others see the move as inevitable. “It’ll just make councillors even more irrelevant than they already were,” one Katharine Street cynic said this morning.

“Katherine Kerswell, when appointed interim chief exec, was given the job with the approval of MHCLG. Since then, increasingly, council officials have been looking to Whitehall civil servants for their instructions, not to the elected council.”

Another source said, “They’d be better appointing commissioners and stop the pretence that there is a meaningful role for councillors in Croydon.”

Another Town Hall source suggested that Jenrick and the Tory government would shy away from that ultimate course of action. “If they did that, then the government would be entirely responsible for Croydon. I’m not sure they’d want to go quite that far.”

Read more: Jenrick orders urgent inquiry into ‘unacceptable’ council
Read more: Council forced to declare itself bankrupt
Read more: Officials to investigate possible wrong-doing at council


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