CROYDON LABOUR IN CRISIS: Having been caught out with another multi-million-pound scandal, the councillors who have been running the Town Hall for the past eight years have now decided to pass the buck to accountants Grant Thornton. EXCLUSIVE By STEVEN DOWNES
Labour councillors at Croydon Town Hall have decided that they don’t want to take responsibility for the series of parlous financial clusterfucks that they have inflicted on the borough.
Their solution is to sack the auditors, after Grant Thornton refused to sign off on the council’s 2020-2021 accounts because of the small matter of £73million that has gone “missing”.
As Inside Croydon revealed last week, the cash-strapped council is mired in another multi-million-pound crisis of their own making which could see them forced to issue a Section 114 notice, effectively admitting that the authority is bankrupt, for the second time in 18 months.
Grant Thornton, and in particular the firm’s partner, Sarah Ironmonger, have been heaping ordure upon Croydon Council with multiple complaints about the authority’s poor governance, lack of proper record-keeping and what they have described as “collective corporate blindness”.
The auditors’ first Report In The Public Interest, or RIPI, published in October 2020 began the process of forcing Tony Newman, the council leader, and Simon Hall, the cabinet member for finance, out of public office as a result of the financial crisis of their own making after they ignored repeated warnings over the council’s diminished reserves, and precipitated Croydon issuing its first S114 in November that year.
But the latest discovery by the external auditors on spending from the supposedly ring-fenced Housing Revenue Account may yet prove to be the final straw for the Labour administration of Hamida “Apologetic” Ali, who took over as council leader when her political mentor, Newman, stood down.
Reports towards the budget-setting process, including Grant Thornton’s assessment of the situation over the “missing” £73million of housing funds, which had been expected to be published before the weekend, have been withheld.
The auditors found that a total of £112million meant for property purchases was used to supplement the creaking budgets of other departments. The auditors suggest that whoever took the decision to use this money for spending on adult social care, children’s services and the IT department may have been acting ultra vires – beyond their legal powers.
A budget-setting cabinet meeting and meeting of the full council, originally scheduled for February 28, has been put back by a week, to March 7, very likely to give the council and Whitehall time to negotiate another “capitalisation direction” – a bail-out – which would avoid the need for a new Section 114 notice. It is just 12 months since the government agreed a record £120million loan to Croydon after the first S114.
So what has Hamida Ali and her ever-diminishing number of Labour councillors – this week, we’re down to 38 – decided to do?
At a group meeting held last week, a vote was taken on a proposal from Thornton Heath councillor Karen Jewitt to ban Grant Thornton for bidding for future council business.
In making her case, Jewitt referred to a number of recent instances in which Grant Thornton, the country’s sixth-largest accountants, had been repeatedly reprimanded by the regulator, in some instances for failing to comply with ethical standards and requirements, in others for “audit failings”, leading to fines of many millions of pounds.
In some sense, there was an echo of this in the snide, pass-the-buck questioning of Ironmonger from Paul Scott, Newman’s long-time best mate, at the recent Extraordinary Council Meeting arising from the Fairfield Halls RIPI.
You were the auditors, was the gist of Scott’s question, why didn’t you spot this going on?
No matter that this essential scrutinising of council business is supposed to be a function of elected councillors. Like Scott.
Of course, Scott’s questioning may well have been motivated by Grant Thornton’s Fairfield fiasco RIPI identifying his wife, Alison Butler, the former deputy leader of the council, for her part in the whole shitshow (Scott, as is to be expected, failed to declare any interest before putting his question or voting against having a police investigation).
Likewise, Jewitt may have a bit of an axe to grind over Grant Thornton.
Jewitt used to get a special allowance for being the chair of the General Purposes and Audit Committee at the council.
GPAC was mentioned no fewer than 13 times in Grant Thornton’s first RIPI on the council’s mismanaged finances. The auditors said that they had given warnings, at GPAC, as long ago as July 2018 about Croydon having the lowest financial reserves of all the boroughs in London.
Those warnings, as Croydon Council Tax-payers now know to their cost, went unheeded, but as a result of the first RIPI, chairing GPAC has been taken out of the gift of the majority group on the council and an outside, independent person appointed.
Jewitt’s proposal to ban Grant Thornton from bidding for future council business was duly approved by her Labour councillor colleagues (even though, after May 5, they may have very little say in the matter).
“It’s not just that they can’t accept any criticism,” a Katharine Street source told Inside Croydon, “it’s that they won’t tolerate even the mention of anything critical.
“It’s the same old bullying culture that existed under Newman and still exists within the group today. They might say that they’ve ‘changed’, but of course they haven’t.
“With them, shooting the messenger is always preferable to dealing with the contents of the message.”
A spokeswoman for Grant Thornton today declined to comment when approached by Inside Croydon.
Read more: Council faces new storm over ‘missing’ £73m housing money
Read more: Council forced to declare itself bankrupt
Read more: £67m fraud at Fairfield: Town Hall row over calling in police
Read more: Council ignored five warnings on reserves
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at email@example.com
- Inside Croydon is a member of the Independent Community News Network
- Inside Croydon works together with the Bureau of Investigative Journalism, as well as BBC London News and ITV London
- Inside Croydon: 3.3million page views in 2021. Seen by 1.6million unique visitors in that 12-month period