Government-appointed commissioners at another Labour-run council have acted swiftly after Slough was handed a record-busting £307m bail-out.
By our Town Hall correspondent, KEN LEE
Croydon’s cash-strapped council this week lost its status as world record-holders for the biggest bail-out ever for a local authority when the Department for Levelling Down agreed (“in principle”) to hand a staggering £307million to Slough.
That’s more than double the £120million that Croydon was given last year – the second £50million tranche of which was only signed-off by the DLUHC on Monday, allowing the Town Hall to pass its “balanced” budget for 2022-2023.
And then, last night, it was announced that the chief executive of Slough council, Josie Wragg, has been sacked for “gross misconduct”. She’s to receive no pay-off or compensation, beyond a bit of cash for untaken leave.
In the context of government “rescue packages” for financially struggling local authorities, with even the previous record reaching a “mere” £50million, the amounts agreed for Croydon and now Slough perhaps demonstrate the true depth of the troubles of councils across the land, as covid has turned the screws after a decade of Tory-imposed austerity.
Many of Labour-run Slough’s deep-seated financial issues will be starkly reminiscent of Croydon.
Wragg had been CEO at Slough since 2018, but had been off work ill since September last year, shortly after her council issued its own Section 114 notice, declaring that it was unable to deliver a balanced budget and was effectively bankrupt.
Unlike with Croydon, the government decided to send in commissioners to take on the running of the “dysfunctional” council straight away, just as they had done with Tory-controlled Northamptonshire County Council in 2018. Croydon, instead, has a supervisory “improvement board” overseeing its conduct.
Northamptonshire, Croydon and Slough remain, for now, the only three local authorities this century to issue S114 notices, admissions of crass failure, although a report from the National Audit Office reckoned there could be 25 councils in England and Wales teetering on the brink of bankruptcy.
It was the government commissioners, rather than any elected councillors in Slough, who sacked Wragg for “multiple failings”. In Croydon, the council’s Labour leadership paid £440,000 to its erstwhile CEO, Jo “Negreedy” Negrini, when she did a bunk in 2020, shortly before the council ran up the white flag.
Case studies of the collapse of Croydon and Slough’s councils will discover a series of similarities.
Both have built expensive edifices to their own hubris, with shiny new council offices. In Croydon, Fisher’s Folly, commissioned by the previous Tory administration, cost the borough £140million – nearly three times the price of similar-sized office developments.
Croydon’s debt increased from close to £1billion in 2014 to £1.5billion by 2020, as the council gambled on the commercial property market to generate rents to help pay for its usual local services.
In the six years from 2016, Slough council quadrupled its borrowing, to £760million, “much of it channelled into property investment”, according to the BBC.
According to the BBC, Wragg was to three investigation disciplinary meetings into her actions.
Announcing her dismissal, the government’s lead commissioner, Max Caller, said: “The chief executive’s failure to address the issues facing the council when she joined and [other] failures… were seriously negligent.”
A report last year by Slough’s chief financial officer, Steven Mair, said that the council’s issues were long-standing and linked to accounting errors, lax financial controls and poor decisions.
There was even the suggestion that Slough could have been technically insolvent as early as 2019, as the costs of its borrowing added to the pressures on its budget.
Meanwhile, in Croydon, Negrini’s replacement as CEO, Katherine Kerswell, denies that the council is again teetering on the edge of further bankruptcy as accountants and lawyers deliberate over the fate of £73million of supposedly ring-fenced housing money that was somehow used, or misused, on other general fund spending.
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