CROYDON IN CRISIS: Council to write-off another six-figure sum after a feeble venture into the home aids retail market fell flat. By STEVEN DOWNES
Another reminder of the disastrous and costly decisions of Tony Newman and Simon Hall when they were in charge of the council and its finances is to be discarded in the dustbin of history tonight.
A meeting of the council cabinet is expected to agree to shut down YourCare (Croydon) Ltd, a private company set up in 2017 to sell wheelchairs, commodes and other home support equipment. Five jobs will be lost – though the company never actually had any staff, instead using Community Equipment Services workers. Those workers are expected to be redeployed.
And Croydon’s cash-strapped council is to write off another £200,000 of debts. Croydon Council Tax-payers will be paying this off until the year 2061.
According to a report going before tonight’s meeting, “A key requisite for delivering [YourCare’s] priorities was to have a fit-for-purpose premises from which to operate and trade. The agreed business plan assumed that YourCare was to move within 12 months of its launch to the new purpose-built premises in order to deliver a break-even position in Year 3 of operation.”
Though open for business from an address in Selhurst in 2018, YourCare failed to move into those “fit-for-purpose” premises on Imperial Way, off the Purley Way, until March 2020. Tonight’s report blames that delay on covid, even though YourCare finally made its move before the first lockdown.
Insiders suggest that the shop rarely had more than one visitor per week, and that many of YourCare’s products were over-priced and uncompetitive. Others questioned the essential premise of the business, when many of the products it had for sale were often available via the NHS.
Simon Hall: another financial mess
According to tonight’s report, “YourCare started trading in April 2018 with the objective of becoming the retailer of choice for daily living aids in Croydon.”
The decision to create the company was taken by Barbara Peacock, then the council’s “executive director (People)”. Peacock lasted less than two years in her post, leaving Croydon in May 2018, just months after the scandal emerged of the council’s failed children’s services department.
Peacock’s decision to establish YourCare was taken in January 2017, the report states, “in consultation with the cabinet member for finance and treasury”, meaning Hall, and Louisa Woodley, who was then the cabinet member for families, health and social care.
Yet again, we are told in tonight’s report, the council is on a “journey“… “Over the last two years a number of external factors have impacted the development of YourCare and its viability. In light of the council’s journey to becoming an efficient, effective and financially sustainable council, coupled with the impact of the covid-19 pandemic on the retail sector, it has become critical to review the position of YourCare.
“At the end of June 2021, YourCare is expected to have a gross debt of £291,000 and
cumulated losses of £238,000. The council is holding a provision of £94,000 which will be netted off against the debt. This will result in a write-off debt of £197,000 (made up of a loan, including interest, and outstanding fees for services to the company) and the council will be required to cover this through an annual average Minimum Revenue Provision of c£4,000 over a 40-year period.”
Elsewhere in the report, the familiar story of a council-owned company that was poorly managed is laid out. “Three consecutives [sic] lockdown [sic] have forced us to focus on an online-only model and capitalise on the growth of this channel while reducing cost. Unfortunately, a number of global factors (Brexit, shortage of foam and steel) have caused significant disruption in the supply chain resulting in YourCare being unable to fulfil orders and online sales.”
Even with online sales growth of 140%, Croydon’s YourCare business couldn’t manage to make a profit
The closure of YourCare is being recommended despite the company reporting online sales for 2020-2021 being up by 140 per cent. Trouble is, the company’s directors, headed by council staffer Paul Kouassi, could not see the business generating profits for another four years.
“It is clear that change of consumer behaviour will fuel online retail growth,” the report states.
“The challenge for YourCare is how quickly this growth can translate into profit. The current trajectory of four years with risk and exposure continuing to grow to up to £481,000 is not sustainable.”
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Strange how Brexit and COVID seem to be the stock excuses for financial failures. No acknowledgement of the financial roulette and actions of an incompetent gambler chasing his losses, while certain in his own mind that he knew better than anyone else. Hall along with Newman has never admitted his inadequacies that has left Croydon in such a mess. Unfortunately they will never be held properly to account for the gross negligence and incompetence.
Until the people making decisions are held accountable for them, we (and other boroughs) will continue to be left to pick up the tab.
The public sector should stick to providing services where there is a natural monopoly, either directly or through term contractors. Trying to compete where there is an established market only risks major losses with little upside. I thought it was Council policy to move towards being an expert Client, not to be doing the work themselves.