KEN LEE reports on the latest twist in the council’s headlong rush towards bankruptcy, and perhaps worse, with the Town Hall’s fate in the hands of Michael Gove
Under a cloud: Croydon Council is subject of a multi-million-pound fraud review by the police
The Metropolitan Police have confirmed that they have opened an investigation into allegations of fraud over Croydon Council and Brick by Brick’s mishandling of the finances for the £67.5million refurbishment of the Fairfield Halls.
As Inside Croydon reported exclusively three weeks ago following an Extraordinary Council Meeting to discuss the latest Report In The Public Interest to be slapped on the council by the seriously unimpressed auditors, the borough’s Monitoring Officer believed that there is enough material in that report to warrant such an investigation.
Labour councillors voted against referring the matter to the police, but someone else has now done the decent thing for them.
“We are aware of the publicly available RIPI in relation to Fairfield Halls – an allegation of fraud has been received and is being assessed,” a spokesperson for the Metropolitan Police is reported as saying by BBC London today.
And as was reported in Private Eye’s Rotten Boroughs column last week, among those identified in the Grant Thornton RIPI are Tony Newman, the discredited former council leader, Jo “Negreedy” Negrini, his choice for chief exec, and Alison Butler, Newman’s former deputy leader.
RIPI’d: Tony Newman and his deputy leader Alison Butler at the reopening of the Fairfield Halls in 2019. Both are identified in the auditors’ report
Butler is the only figure mentioned in the auditors’ RIPI who is still involved with the council. She attended the ECM, and she was allowed to vote against having a police investigation.
Neither Butler nor her councillor husband, Paul Scott, declared any interests at the meeting.
The Labour-controlled council has since been plunged into an even deeper crisis, unable to properly account for £73million-worth of funding from the ring-fenced Housing Revenue Account, which the auditors say appears to be spent on other council departments, without proper authority, or ultra vires.
Grant Thornton have so far refused to sign-off on the council’s relevant accounts – pushing the authority ever-closer to the possibility of having to issue a Section 114 notice.
A S114 notice is a measure taken by a local council whenit cannot fulfil its legal responsibility and balance its books. It is an effective admission that it is broke. When Croydon issued a S114 notice in November 2020, unable to plug a £67million hole in its budget caused by a deadly combination of covid and Brick by Brick, it was only the second council in England this century to do so. Now, Croydon is on the brink of having to issue a second S114 notice inside 18 months.
One in the Eye (again): how Croydon, Newman, Negrini and Butler made it into the Rotten Boroughs column last week
Since the beginning of 2021, Croydon Council has been under the effective financial control of a Whitehall-appointed “improvement panel”, chaired by Tony McArdle, part of a deal which saw the Town Hall granted a £120million bail-out, the biggest in the history of British local government.
McArdle’s panel would usually submit a progress report to the Department for Levelling Up once every three months. Their latest report is about one month overdue.
It is possible that if Croydon fails to demonstrate that Katherine Kerswell, the chief executive, and her staff and the borough’s 68 remaining councillors are capable of managing their finances, McArdle could pull the plug and the government can send in commissioners to run the council.
This was a role McArdle filled at Northamptonshire County Council when it went bust four years ago. That council no longer exists.
Misappropriating any money from the Housing Revenue Account, in a robbing-Peter-to-pay-Paul ploy, is a big local authority no-no. Doing it with £73million might be just the sort of thing to stretch the patience of McArdle and his panel, and Secretary of State Michael Gove, beyond breaking point.
Back in the autumn of 2020, Croydon’s council leadership – Newman, Simon Hall, Butler and, indeed, several members of the current cabinet – appeared to be in denial of the seriousness of the situation, repeatedly claiming its financial position was in some way fixable, when it clearly wasn’t. Croydon’s first RIPI accused them of “corporate collective blindness”.
Croydon’s fate in his hands: local government minister Michael Gove
Today, the council issued a statement regarding the missing Housing Revenue Account millions and Croydon Affordable Homes which seemed to display a similar reluctance to deal with the seriousness of the position.
“The council is on track to deliver a balanced budget next year and is currently projecting a £1.8million underspend for this financial year,” the crisis-hit council said.
“We are working with our external auditor to address all outstanding legacy issues which may impact on the 2019-20 accounts, one of which relates to historic accounting arrangements for Croydon Affordable Homes.
“We aim to resolve these issues and close the accounts as soon as possible.” Those accounts should have been completed by September 2020.
“Cabinet papers setting out this year’s budget and any legacy risks will be published later today.”
The report on the “missing” £73million was expected to be published a week ago, but was inexplicitly withheld.
Since then, virtually all council meetings scheduled to be held at the Town Hall over a two-week period – at least nine, according to the council’s own website – have been cancelled or postponed.
The budget-setting meetings of the cabinet and full council have now been re-set for Monday, March 7, as officials frantically renegotiate with Whitehall over yet another emergency bail-out.
BBC London reported today that “the budget for 2022-2023 now has to take into account a fresh £73million shortfall from allegedly botched property deals on top of the bailout”.
An unnamed Croydon Tories spokesperson told the BBC, “Terrible choices have already caused one bankruptcy and it’s frankly embarrassing that the council is having to go to government with a begging bowl to run basic services for local people.”
- Members of the public are allowed to refer matters of concern, such as the non-declaration of an interest by a councillor, to the council’s monitoring officer. They can do so by emailing the chief executive Katherine.Kerswell@croydon.gov.uk
Read more: £67m fraud at Fairfield: Town Hall row over calling in police
Read more: Council faces new storm over ‘missing’ £73m housing money
Read more: Kakistocracy: Butler forced into £6m bail-out of Brick by Brick
Read more: A level of ineptitude which would be tolerated nowhere else
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I think Michael Gove could be taking control over the council within days and it might be the right thing to do. Suspension of council meetings and a delayed budget setting suggests involvement of central government? Maybe I need a tinfoil hat?
In an article on this site dated 2 Sept 2021 it was reported that Ali and Kerswell had told the Municipal Journal that they had turned the Council’s finances around. I commented that if they believed that, they were not fit for office. I stand by that comment and developments have shown that they clearly had little comprehension about the perilous state the Council’s finances were and are in.
Top comment work, David.
You can tell how low Croydon Labour have become by considering that they almost unanimously backed the leadershit (sic) responsible for this mess and then hounded out the only person in their own ranks to confront them with uncomfortable truths; Andrew Pelling.
To add insult to injury, the silly councillors voted not to employ Grant Thornton again, another act of blaming the messenger for the message.
If by some chance Val Shawcross does become Mayor, she’d be well advised not to give any jobs to those who, whether by complicity or stupidity, bear responsibility for this unholy mess. That some of them will get re-elected demonstrates how dim their supporters really are.
People can be disqualified from being a company director for unfit conduct. Is there some similar disqualification for local authority employees and councillors? If not, why not?
If a Council’s auditors fail to sign off that Council’s accounts for 2 or 3 years in a row, what mechanism is in place to escalate an examination of this failure? Surely Grant Thornton had a duty to alert a higher body that something was rotten in the state of Denmark? Why is it only now that we learn of the “missing” 73 million pounds?
It beggars belief that stories are trickling out, Fairfield Halls and now this disappeared money, and the people responsible are still walking the streets of Croydon, even worse, still attending Council meetings.
Perhaps the only way forward is to go bankrupt again, have a new set of people move in to run our town, but I would humbly suggest that all the parties involved in this shambles should be closely examined and that includes the Auditors too. One last thought, why did no Government body step in 2 years ago and query why the Auditors failed to sign off our accounts?
Maybe the big auditors have treated audits as cash cows and lost sight of their ethical duties. Grant Thornton were fined £1.3 million re Interserve in November and £2.3million re Patisserie Valerie in September.
These are eclipsed by numerous fines paid by PWC!
I wonder what is being done to supervise these firms’ work.
It’s a reasonable point.
Who was it that got rid of the old, civic District Auditor?
After all this time it is getting less and less likely that the accounts will ever be signed off. The auditors must be fully aware of what the council’s senior staff have been up to, desperately searching for some financial sleight of hand to hide £73m somewhere in the accounts, and are not having any of it.
What will happen next? Hunt around some less scrupulous auditors who are prepared to put their name to it? I think Bernie Madoff’s auditor was a one man band working from a shop somewhere.
just what the ‘F’ has Kerswell done, achieved or uncovered in her time ?
PLEASE tell us.
Or is she yet another merry-go-round authority waste of space, taking a huge packet and will F-off before the next cock up us uncovered or she is found out for being totally unproductive and useless.
What difference has she actually made in addressing the urgent repairs needed to Council flats and properties apart from wasting her time on recruiting new overpaid executives to her executive team?