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
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.
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.
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”.
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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