Labour group’s response to £73m scandal? Sack the auditors!

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

No change: Croydon Labour’s new boss, Hamida Ali, with the old boss, Tony Newman. Criticism is never tolerated

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.

Grant Thornton’s second RIPI, published last month, has prompted a possible fraud investigation into the botched refurbishment of the Fairfield Halls, and a £37.5million overspend.

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.

Audit chief: Sarah Ironmonger has issued two RIPIs to Croydon in 18 months

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.

Replaced: Karen Jewitt, no longer GPAC chair

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

Become a Patron!


About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
This entry was posted in Alison Butler, Business, Croydon Council, Hamida Ali, Karen Jewitt, Paul Scott, Report in the Public Interest, RIPI II: Fairfield Halls, Section 114 notice, Simon Hall, Tony Newman and tagged , , , , , , , , , , , , . Bookmark the permalink.

7 Responses to Labour group’s response to £73m scandal? Sack the auditors!

  1. Having seen Councillor Scott in action, when he threatened to get the police to remove the public from an ‘open’ Planning Committee meeting, simply because they were asking questions that didn’t suit him, I’m not surprised that he continues to act like a demagogue. He went on to hector all concerned into accepting his decisions. If he is involved in any criticism of the auditors, both intelligence and instinct would tell me which side to take. What’s he still doing on the Council anyway after dropping Brick after Brick, in the partisan and financially disastrous decision making that he helped to instigate?

  2. Pelling will be well rid of this shower

  3. Haydn White says:

    Effectively kicks the ball into the long grass , putting the day of reckoning off by several months

  4. Dave Russell says:

    During my mercifully brief spell as a Local Government Officer (couldn’t stomach the “don’t do today what you can put off til tomorrow” attitude) it didn’t take long to learn that the only thing the bosses feared was a visit from the erstwhile District Auditor, who, of course could not be ignored, let alone sacked.

    • Lewis White says:

      As a former Local Government Officer who worked in 3 London Boroughs since the mid 70’s to 2016 (but not in Croydon) I am sorry that Dave Russell (from his post above) seems to have got a job in the type of council or department he did. My experience over that time as a Landscape officer, landscape architect and project manager was in general rather different, finding only a few jobsworths and “cultural procrastinating deadheads” like that.

      I found a lot of rather hard working and effective people, and a more than a few very talented ones who made a real benefit to the work of the councils and our world. And also some very funny ones. Local Government is a home for some very creative types too!

      The list includes Parks people, from assistant gardeners to heads of parks, arboriculturalists, highway and structural engineers, with whom I worked on environmental projects, architects, quantity surveyors, planners, housing officers, highway maintenance staff and senior officers, cleansing staff from sweepers to top managers, and many others.

      There were also many excellent councillors.

      I have also been a Chair of a home-counties residents association, and have had both very good and sadly rather poor experiences when dealing with council officers and councillors from various councils in Surrey, Kent and London.

      One of the differences between then and now is glaringly obvious– we were adequately resourced in terms of funding for projects, and also, until Mrs T came along, we had our own architects departments and were allowed to build our own council houses. We had the skills in house to design , tender and manage large building and engineering and parks contracts. And did many fine projects in all areas.

      Local Government has been “de-skilled” of a range of staff and “de-prived” of funding.
      When I was at one council in the 1980’s we had about 10 Landscape architects. Now it has…. none. Says a lot. Sad indeed.

  5. Ian Ross says:

    Sadly there is no bottomless pit in which to cast this shambolic rabble. Instead, let’s hope criminal proceedings are swift and the tax payers will see justice if not value for this fiasco.

  6. Like Lewis, I also spent 40 years working in local government in Social Services Departments in four different local authorities. By and large I worked with hard working colleagues with a great deal of commitment to the clients they served. It isn’t too good to hear those workers undermined and blamed, especially at a time when services and staffing have been slashed to the bone pretty consistently from 2010 onwards.

Leave a Reply to Haydn White Cancel reply