CROYDON IN CRISIS: Tonight’s council cabinet meeting is to be told that officials are struggling to meet their £38m budget cuts target. And the council’s future is now in the hands of Michael Gove.
By STEVEN DOWNES
Worried look: Richard Ennis has been expressing his concerns in Zoom meetings with councillors
There are growing concerns among senior officials at Fisher’s Folly that they will be unable to achieve all of the £38million cost-cutting required in order to satisfy the bean counters in Whitehall and opportunistic Tory politicians, and therefore lose out on a £25million government loan essential to being able to save the cash-strapped council.
The council cabinet meets tonight for its latest session of sackcloth and ashes, poring over the budget proposals for next year.
Richard Ennis, the council’s director of finance, spent more than six hours in a turgid meeting of the council’s pensions committee on Friday, just to make sure that the councillors and pensioners’ representatives would duly vote through a reduction in the authority’s contributions to the fund worth more than £6million over the next two financial years (2022-2023 and 2023-2024). Every penny, it is clear, counts.
The report placed before cabinet tonight suggests that even with the unexpected help from the pensions fund, the council could miss its cuts target by at least £13million.
Ennis had told an earlier meeting of councillors, “There’s a gap between savings identified and the savings that are needed.”
Speaking more generally about the direness of the straits that Croydon finds itself in, Ennis told the latest meeting of GPAC, the General Purposes and Audit Committee, “There is an awful lot to put right here. It will take three to four years to turn around.”
Doom and gloom: tonight’s budget report to cabinet
The report to tonight’s cabinet, written by Ennis, expresses concern around £12million-worth of adult social care costs which Croydon had hoped to unload on to the local NHS, and the millions of pounds in new income which had been promised by a rather unrealistic council director from fines levied on car drivers by new Automatic Number Plate Recognition cameras, ANPRs.
“From an original gap of £38million for 2022-2023, savings proposals and growth requests (including a contingency for delivery risk) has so far identified options that would
reduce that gap to £13million,” Ennis’s report states.
“This is net of the council also dealing with further growth pressures but does include some areas that are still under negotiation that will be confirmed in the January and February reports. This further work is needed to provide greater delivery certainty against a number of identified savings options, and in particular the announcement of the Local Government Finance Settlement not being expected until late December.”
Elsewhere in the report, it outlines the risks to being unable to deliver a balanced budget.
Taking care: it will be February before the NHS gives the council its answer on £12m-worth of costs
It had previously been proposed to off-load to the NHS many of the costs of social care packages, mainly for the borough’s more elderly residents on discharge from hospital. But no agreement has yet been reached.
“Discussions and negotiations continue with the NHS to ensure the council receives increased allocation of resources… on the substantial costs resulting from the increased needs of the population being met through the discharge to assess process”.
There is, as with most matters these days, a suggestion of covid playing a part here, the report noting that “sustained high hospital occupancy” is creating the cost pressure. “The numbers requiring support with discharge, predominantly through social care, are substantially higher,” the report says. No decision is expected from the NHS until February, the 11th-hour in the council’s budget-setting process.
The report also relates how the council has taken a £5.12million hit because the government turned down the renewal of Croydon’s Landlord Licensing Scheme.
Council officials overseeing the so-called “Healthier Neighbourhoods Schemes” (what had previously been called LTNs, or Low Traffic Neighbourhoods), have promised to deliver fines income of £5.025million in this financial year, £8.205million next year and £11.606million in 2023-2024 – nearly £25million over three years. But that is already looking wildly optimistic.
“For 2021 there is already a £3million income shortfall forecast as a result of delays in decision making and ongoing impact of covid,” the report says.
The ghost of Tony Newman and his numpties’ questionable handling of the borough’s finances continues to haunt the Town Hall corridors. “Ongoing work continues to address queries raised by the council’s external auditors with regard to the 2017-2018 accounting treatment of capital receipts and assets transferred to the Croydon Affordable Homes charity,” the report says, offering plenty of potential for reading between the lines that something could be very wrong indeed.
Your future in his hands: Tory minister Michael Gove
The real Doomsday scenario, though, is that the government turns off the taps on the bail-out loans – “capitalisation directions” – that were announced earlier this year.
Agreement in principle with what was then the Ministry of Housing, Communities and Local Government was announced for the bankrupt borough to receive £70million to cover the immediate shortfall in covid-hit 2020-2021, plus another £50million in this financial year. At £120million, Croydon’s bail-out is the largest settlement for a local authority in British history.
But the government department, now the Department for Levelling Up, Housing and Communities, DLUHC, under the obnoxious Michael Gove, is still holding out on the later pay-outs.
As the report states, “The 2021-2022 budget assumes a capitalisation direction approval of £50million with £25million and £5million for the following two years… The 2021-2022 capitalisation direction remains only ‘approved in principle’ whilst those for future years remained for DLUHC to consider after the Spending Review.”
Croydon’s future, in the hands of Gove, could be stark indeed. As the report warns, “Should these not be approved or approved at lower levels this would significantly impact on the remaining gap.
“They are needed to balance this budget.”
Read more: Kerswell culls 58 more jobs as council wrestles with budget
Read more: Town Hall’s untrue claims about cuts to Council Tax Support
Read more: Further £38.4m to be sliced from next year’s council budget
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It wasn’t long ago that this site was reporting claims from Hamida Ali and Kerswell that they had solved the Council’s financial problems. What had actually happened was that the government had allowed them to borrow more money whilst they found savings. Now that seems in doubt, partly due to over optimistic forecasts by senior staff. This doesn’t sit well with the current recruitment drive for an expanded and expensive leadership team. If I were Gove, and I’m pleased I’m not, I’d consider Croydon to be in the last chance saloon.
Is Croydon destined to be forever served by inadequate leaders?
The Council’s ongoing inability to manage the budget is shocking but unfortunately not surprising. The failures that led to the original financial mess have clearly not been dealt with if we are still seeing unrealistic forecasts and budgets that bear little relation to reality.
Balancing the budget is no easy task with the government clearly forcing the Council to make even more cuts. (And let’s be clear, these are cuts not savings – nothing is being saved.) The Council should be pushing back against these cuts but the inability to manage the existing budget weakens any argument to increase it.
The Council should be putting its own house in order and sorting out it’s budget management processes. It then needs to draw on the expertise of those working in the Council and on it to come up with better ways of balancing the budget than just cutting services (credit to Andrew Pelling for making some serious and interesting contributions already). And we need to work with the many other Councils across the country to show that the Government’s cuts are unsustainable and damaging to our communities and must be reversed.
I’ve said this before, there is already nothing left to cut. This proposal they put before the government to get the loan is clearly wildly unrealistic and now it’s coming back to bite. At the end of it all residents and employees are suffering hugely.
Peter, the top table have no interest in “drawing on the expertise of those working in the Council”. They are to haughty to think middle and lower staff have anything to contribute.
I know. I was talking about this with union members outside the town hall on Monday night while councillors and one of the other mayoral candidates scuttled past trying to ignore us