CROYDON IN CRISIS: Town Hall chiefs still trying to negotiate another multi-million-pound government bail-out, with time running out to issue 136,000 Council Tax notices. By STEVEN DOWNES
The council is on the brink of crashing into bankruptcy, unable to set a balanced budget for 2022-2023 and running close to breaking its own deadline for issuing official Council Tax notices before the start of April.
The council’s budget-setting meetings, which were supposed to have taken place on Monday, the last day of February, were postponed once the external auditors, Grant Thornton, refused to sign off on previous years’ accounts because there is £73million-worth of spending that could not be properly accounted for, as was exclusively reported first by Inside Croydon.
Now, the council has conceded the real possibility that the full council meeting in the Town Hall chamber might not be staged on Monday, March 7, either.
The budget-setting is the most important piece of Town Hall business all year.
Croydon is now contemplating postponing the meeting a second time, and yesterday published on its own website two further “contingency” dates – next Thursday, March 10, and Friday, March 11.
Katharine Street sources say that the reason for the postponements and contingency dates is because council officials are deep in discussions with the Department for Levelling Up, Housing and Communities for a further “capitalisation” arrangement – another government bail-out to patch-over the £73million hole in the budget discovered by the auditors.
It is only 12 months since Croydon was given £120million, the biggest bail-out in the history of local government, following the council’s financial collapse in November 2020.
With the Town Hall mired in repeated financial problems of its own making, it seems increasingly possible that Tory government minister Michael Gove and DLUHC decide that Croydon Council cannot be salvaged, and they decide to send in Whitehall commissioners to take over the running of the authority, just as they did with Northamptonshire in 2018.
It may be significant that one of those commissioners appointed to take the management of the authority out of the hands of Northants’ politicians and local government officials was Tony McArdle, now the chair of Croydon’s improvement board, appointed last year to oversee the work of council leader Hamida Ali and chief exec Katherine Kerswell.
McArdle and his three board colleagues are supposed to issue a report to Gove and DLUHC once every three months. Their latest report is one month late.
“These people operate like clockwork, that’s why Whitehall uses them,” the Katharine Street source said. “So if their quarterly report is late, there will be a very good reason for the delay. Of course, they will know about the external auditors’ latest concerns.”
There is little time remaining for further delays as far as passing the charges for Council Tax are concerned.
The Council Tax year begins in April, and the council is supposed to send out notices of the charges to all the borough’s 136,000 households in advance of the first payments being collected. But the council is unable to conduct that essential function until the Council Tax is formally approved at the budget-setting meeting.
Last week, before the “contingency” of a second postponement of the budget-setting meeting was admitted in public, the council put out a statement that sought to suggest that everything in the garden was rosy. The realities, such as the missing £73million, were to be found in the budget meeting’s reports.
Hamida Ali and her colleagues in the Croydon Labour Party have been spinning that they have balanced the books, when the truth is that the financial position was straightened out only with £70million from the government bail-out, while the 2022-2023 budget includes another £30million-worth of cuts to services, together with a 4.1per cent hike in council rents, the maximum increase possible in Council Tax, and a “Dickensian” cut to benefits for some of the borough’s poorest households.
“Since October 2020, Croydon has made significant progress tackling its financial challenges and is currently projecting a £1.8million underspend for this financial year,” the council said in its budget statement.
“The council is now entering the second year of its renewal plan – a three-year programme to transform the council and become financially sustainable by 2024.”
The council, which has £330million-worth of spending budgeted for the next 12 months, said, “Most of the council’s funding – 62per cent – goes on protecting vulnerable older people and children and families. The proposed budget continues this focus, investing more in a range of areas such as special educational needs and support for carers.
“The council will also spend significant amounts on everyday services such as waste and recycling, parks and libraries; social care for children and adults; measures to reduce poverty and tackle inequality; and services and activities for young people.”
The council is justifying its cuts by claiming they are supported by residents and quoting its self-serving “budget engagement exercise”.
The activists, representing trades unions, disability groups, tenants’ boards, charities, food banks and even including some members of the Labour Party, who are together planning protests outside the Town Hall ahead of next week’s meeting, whenever it might be held, won’t agree.
The 2.99per cent Council Tax rise, including the 1per cent precept for adult social care, is the maximum allowed by law.
Council leader Ali describes all this as “significant progress”, after presiding over around 500 council workers losing their jobs in the past two years.
“We are on track to deliver a balanced budget for this year and next,” she said.
“Despite our challenging financial position and over a decade of government austerity, this budget keeps all of our libraries and children’s centres open, protects fortnightly bin collections, our youth and domestic violence services and other resident priorities.
“By focusing on quality core services and ensuring we offer our residents the best possible value for money we have been able to protect frontline services and focus on supporting our borough’s recovery from the pandemic.
“We will also invest in our communities’ futures, by improving the way the council services run to ensure we are there for residents when they need us the most.”
- Click here for the council finance report to the cabinet
- Click here for the council’s explanatory notes on the financial disaster
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