Budget reminder: ‘Better to break the law than break the poor’

ANDREW FISHER waded through the council spending reports and endured last night’s Town Hall meeting so that you didn’t have to…

Croydon’s finances are in a state.

The blame for that lies with the Conservative government that has slashed Croydon’s funding, the previous Labour administration that mismanaged that reduced funding, as well as the prior Conservative-run council, too, to some extent.

Government funding to local councils across England has been cut by a cumulative £100billion since 2010 and is today £16billion per year lower than it was just over a decade ago.

In that time, Croydon’s population has increased by 9per cent, yet central government funding to this borough has fallen by more than £50million a year since 2015-2016. It reflects the dire state of council finances that have been inflicted by the government that Croydon has had to find £38million of cuts and “efficiencies” this year.

There are also structural funding problems facing Croydon.

As an outer London borough, Croydon gets just £228 of government funding per citizen. Lambeth gets £450. If Croydon’s funding per person was brought up to Lambeth levels, that would be another £65million, perhaps more, that Croydon would have to spend on its residents.

Government housing policy has seen house prices and rents across London rocket in the last decade, and homelessness more than double. That leaves councils picking up the pieces trying to prevent families being forced on to the streets, and having to fund expensive and often substandard temporary accommodation – with less resources to do so.

One group not responsible are the people of Croydon, who are the ones who will suffer cuts to services (euphemistically described as “significant savings and efficiencies”), and increased charges, rents and, after last night’s budget-setting Town Hall meeting, Council Tax, which will rise by 4.11per cent – equivalent to £77.51 for a Band D property, or £1.49 per week.

The vast majority of the council’s staff are blameless too – yet hundreds have paid with their jobs, and those that remain are getting a frankly insulting 1.75per cent pay offer (decided nationally, not locally) while the council emphasises the importance of “recruiting and retaining sufficient skills in the council”.

Among the reams of documents and papers presented ahead of last night’s budget meeting was one council report that cites the independent auditors noting that, since its financial collapse in 2020, the council has made “significant progress” and that “recovery was well underway”.

Heated debate: the Labour-run council has set a budget which removes Council Tax Support from 20,000 households, increases council rents by 4.1% and hikes Council Tax by 4.1%

But that progress has been undermined by a recently discovered skeleton in the cupboard which led the council’s Section 151 officer – the borough’s finance director – to note “the council is at risk of a further Section 114 notice being served”. Of which, more later.

With the government continuing to use end-of-year decisions on grants to councils, even planning for the future is difficult, with the council’s budget report criticising “the continuation of annual budget settlements that significantly hamper medium- and long-term planning” – something that the Local Government Association should be lobbying to reform on behalf of all its member councils.

Croydon’s 2022-2023 budget increases the council’s reserves by £22million.

Rates rebel: George Lansbury

This may well be a financially sound decision in the context of rising inflation, geopolitical uncertainty and low economic growth. But it will feel tough on some of the poorest residents whose Council Tax benefit is either being removed entirely or significantly reduced to save the council a measly £5.7million in the middle of a cost of living crisis.

Surely building resilience around Croydon’s poorest residents might be important too? Could the reserves not cope with being bolstered by only £16.3million instead?

There remains the lingering suspicion that, although Croydon’s Labour leadership are not saying so, this significant increase in reserves has been a decision taken for them, by the government-appointed improvement board.

In the 1920s, George Lansbury, the leader of Poplar Council, and his fellow Labour councillors refused to yield to such diktats, as they campaigned under the slogan, “Better to break the law than to break the poor”.

The Poplar rates rebels were jailed for their troubles, but ultimately won the political battle. Such protest is not possible in local government now, even if such principle was present, but the failure to communicate the main reason for local government cuts has left people uninformed and demobilised.

Take another example. Croydon, despite having the highest rates of child deprivation in outer London, receives less funding per pupil than many other comparable boroughs. Primary schoolchildren in Merton get an extra £50 each of spending, while for secondary schools that rises to an extra £170 each. For some reason too, Croydon is allocated less funding in early years than children in neighbouring Sutton and Merton.

Croydon’s councillors and MPs should be working with local schools, childcare providers, parents and education unions to lobby government to get fair funding for our children.

Likewise, while the council’s general finances are in a parlous state, Croydon’s Housing Revenue Account is separate and in a healthy state. So why on earth is the council raising council rents by 4.1per cent this year, at the same time as cutting Council Tax Support?

After the revelations this year about the conditions some council residents live in, they deserve a rent cut, not a rent rise. The council’s Section 151 Officer says in their report, “the Council needs to obtain greater clarity on the condition of its housing stock”, after the botched outsourcing of housing maintenance to cowboys Axis, under the last Conservative administration, and the failure to manage the contract.

But on this and virtually every other issue, the Conservative opposition on Croydon Council that voted through previous Labour budgets and raised not a murmur about government cuts to the council’s finances, were silent. Led by their mayoral candidate Jason Perry, they offered only an amendment to re-open Purley Pool.

The big issue that loomed over this budget is the ongoing investigation into the accounting for £73million within the council’s finances. The short story is that if adjudged to have been incorrectly accounted for, this could lead to another Section 114 notice, at which point the government would almost certainly send in commissioners to take the running of the council out of the hands of council staff and local politicians.

Cynics suggest they’ll wait until the result of the May mayoral election before deciding…

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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
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3 Responses to Budget reminder: ‘Better to break the law than break the poor’

  1. Adrian Lee says:

    Would be interested to hear a bit more about the rationale(s) that could be used to decide that the HRA issue is either correctly or incorrectly accounted for? Could Andrew do a quick follow up paragraph or two explaining each scenario?

    Incorrectly accounted for because “xyz” rules apply and these have not been followed…?

    Or, Correctly accounted for because “abc” get out provisions allow rules “xyz” to be set aside in particular circumstances and these circumstances have indeed arisen (according to the Council…)?

    Only asking Andrew because, as the article intro says, “ANDREW FISHER waded through the council spending reports and endured last night’s Town Hall meeting so that you didn’t have to…”.

    • Try wading through this website’s extensive coverage of this issue, including our breaking of the news, coverage of the council report to cabinet (including pdf of the report itself) and Kerswell’s interview with the LGC, which explain the matter fully, repeatedly, and even offers the council’s QC’s advice.

  2. Eve Tullett says:

    Surely the answer to rent/council tax rises is obvious in the context of the overall council debt? The loans probably would never have been approved if the council wanted to keep rents low or reduce them. Its all about paying it back in the minimum amount of time which obviously hurts residents more but theyve shown by their actions in the last few years that residents have never been at the forefront of their minds.

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