CROYDON IN CRISIS: The long-withheld Penn Report describes a dysfunctional local authority where the former CEO was accused of ignoring elected representatives and keeping vital information from them.
In our latest extract, we reveal what one Labour cabinet member really thought of the controversial chief exec. EXCLUSIVE by STEVEN DOWNES
The problem with the Penn Report and Croydon Council is that it got people’s hopes up.
Maybe that was exactly what Katherine Kerswell intended when she drafted the terms of reference for Richard Penn, the Local Government Association investigator, and asked him to look into the “possible wrong-doing” that led to Croydon’s financial collapse.
In November 2020, Kerswell had just been appointed as Croydon’s interim chief executive. She had been around in local government circles for long enough to know, in the interests of all senior civic officials who enjoy only passing accountability for the way they manage billions of pounds of public money, when there’s a need for a stiff broom and a carpet for stuff to be swept under.
“We know what happened, that’s in the auditors’ Report in the Public Interest,” Kerswell told councillors at a scrutiny committee meeting two years ago. “This independent investigation by the LGA will look at how it happened. If the investigation finds that formal questions arise, then that will take place.”
Kerswell has done nothing about any of it since, apparently ignoring calls from Labour and Conservative councillors alike. But then the Penn Report gives a full account of how Kerswell’s predecessor at the dysfunctional council had also ignored the wishes of the borough’s elected representatives, too.
Kerswell had been parachuted into crisis-hit Croydon with the blessing of Whitehall and the assistance of the LGA. To this day, the LGA is paying the salary for Croydon’s deputy chief executive – a role that wasn’t needed and didn’t exist until Kerswell arrived in Croydon.
Ignoring councillors: CEO Katherine Kerswell has resisted calls to publish the Penn Report
It was Kerswell herself – without any reference or discussion with the council’s Labour leadership or the elected representatives on the council itself – who drafted the terms of reference for Penn. Item 11 of those terms of reference reads, “The report will be presented to the council.”
Of course, Kerswell has ensured that the Penn Report has never been seen by more than a handful of elected councillors, despite its serious recommendations that the police should be called in to investigate possible misconduct in public office, and to consider the possible reclaiming of the £437,000 pay-off handed to Jo Negrini, her predecessor as CEO, for possible breach of contract.
It is worth remembering that, of all the special reports into problems at local councils up and down the country that Richard Penn has been asked to conduct on behalf of the LGA over the last decade or so, research has been unable to find a single instance where the official’s recommendations have led directly to any form of disciplinary or police action being taken.
And that’s something Kerswell, after keeping Croydon’s Penn Report under lock and key for almost two years, probably knows only too well, too.
Page-turner: the Penn Report makes important recommendations that the CEO has failed to act upon
As detailed in our previous extracts from his report, in his 160-page document Penn was always at pains to try to not identify the individual concerned when recounting the 60-plus interviews he had conducted.
But there are times when he was either not trying very hard, or not trying to conceal the identity at all.
Interviewee 11, we think, might be one of those instances.
The lengthy account given by Interviewee 11, described by Penn as “a former and/or current member of the cabinet or committee chair”, reads very much like Simon Hall.
Until he resigned just before the highly critical Report in the Public Interest was released by auditors Grant Thornton in October 2020, Hall had been the cabinet member for finance, a key member of Tony Newman’s Gang of Four – together with husband and wife couple Alison Butler and Paul Scott – that dominated the running of the council. Hall had held the position since 2014.
If Interviewee 11 is Hall, his account of the way the council had been run on his watch is both shocking and extremely worrying, as it shows that senior council executives, Negrini in particular, were completely out of control.
Interviewee 11 told Penn that councillors were “concerned about what they were being told by officers and whether any information or advice that they were given could be trusted”.
Denied full information: one of Penn’s interviewees, who may be Simon Hall, claimed that advice given by council staff could not always be trusted
Section 7 of the report is “The roles of elected members and officers”, using councilspeak’s self-aggrandising jargon, where “members” mean councillors and “officers” mean council staff.
In this chapter, Penn writes, “Interviewee 11 now believes that [Negrini] had instructed finance department and other staff not to share key information with Interviewee 11.”
In August of 2020, it had been Hall, together with Newman, who had pushed through the £437,000 golden handshake for Negrini.
Yet by the time he was being interviewed by Penn a few months later, “Interviewee 11” was saying “there had been considerable information withheld by officers of the council”, and therefore almost certainly with the knowledge of Negrini.
Penn provides a handy list of what Interviewee 11 said was withheld from the council’s Labour cabinet:
- the scale of the overspend in 2019-2020 – which was eventually more than £60million;
- how weak the finance team was;
- how a council-owned company, London Borough of Croydon Holdings LLP, was struck off by Companies House for failing to file its accounts on time;
- the breach of Treasury management limits; and
- details of loans to Brick By Brick.
Hall had been one of the biggest advocates for Brick by Brick. If Interviewee 11 really was Hall, and he was now saying that did not know the details of the £200million-worth of loans which he had helped authorise to the council-owned house-builder, it is yet another example of how Croydon Council had become unmanageable.
In para 7.5.1, Penn writes that Interviewee 11 “told me that the culture of the organisation was a big issue, and Interviewee 11 had taken this up with [Negrini] following the local elections in May 2018…”.
Losing control: according to Interviewee 11, Labour councillors spent more time campaigning than running the council before the 2018 elections
Interviewee 11 explained that in the six months before 2018’s polling day, “members were focused significantly on the election”, effectively admitting that delivering leaflets and taking gormless campaign selfies became more of a priority for Labour councillors than the task of actually running the council.
“Interviewee 11 saw that [Negrini] had filled that space and the balance of power had changed.
“When Labour came back to form an administration in May 2018 with an increased majority and an ambitious manifesto to deliver, this inevitably led to difficulties between [Negrini] and the former leadership.
“Interviewee 11 reported
that [Negrini] started to say, ‘But I’m the Head of Paid Service!’ during any difficult conversations with members… this seemed to be a device by her to close down any debate and to impose her authority over members.
“The relationship with [Negrini] had changed significantly. She seemed to Interviewee 11 to be intent on pushing elected members to one side and to hamper or even prevent the flow of information to them. This had resulted in a series of rows between Interviewee 11 and [Negrini].
“The (former) chief executive had complained to the former [council] leader [Tony Newman] but Interviewee 11 described being treated with disrespect by her.” This, the report suggests, took the form of Negrini saying that this sometime cabinet member “had no right to be so inquiring and demanding to know things”. As if!
Penn writes, “[Newman] was supportive to Interviewee 11 but the relationship with [Negrini] was very much affected by this from then on.”
‘I’m head of paid service’: Jo Negrini sought to close down discussions with senior councillors
Penn reveals that, “Interviewee 11 did consider making a formal complaint about her but in the end decided not to.
“What has become much clearer to Interviewee 11 recently is the extent to which members had been marginalised over the last couple of years.
“There were things in the [Report In The Public Interest] that Interviewee 11 only found out about on reading the report…
“It is clear to Interviewee 11 now that proper financial management processes were not in place and that the necessary restrictions were not being implemented. Interviewee 11 now believes that [Negrini] had instructed finance department and other staff not to share key information with Interviewee 11 even though it was pertinent to the role held by Interviewee 11.”
Interviewee 11, according to Penn, claimed that the former cabinet member for finance and resources – that is, Hall – was never consulted about potential loans to Brick by Brick. “The cabinet member was never consulted about this and there were no checks and balances in place to ensure this happened.”
In para 7.5.3, Penn writes, “In Interviewee 11’s view there were many decisions taken by cabinet or cabinet members that were simply disregarded and not implemented.”
The 60-odd councillors at the Town Hall today who have so far been denied the opportunity to read the Penn Report, apart from in the pages they’ve read on Inside Croydon, might well be asking whether anything has actually changed over the accountability of senior council executives…
Read more: #PennReport wanted police probe into possible misconduct
Read more: #PennReport: Cover-ups and denial over Brick by Brick failure
Read more: #PennReport: Staff speak out about ‘scandalous’ bullying
Read more: Men who led council to bankruptcy say they did nothing wrong
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“If Interviewee 11 really was Hall, and he was now saying that did not know the details of the £200million-worth of loans which he had helped authorise to the council-owned house-builder, it is yet another example of how Croydon Council had become unmanageable”.
It’s a bit more than that.
It’s him trying to wriggle off the hook.
When matters are being brought to Councillors attention by residents since 2016 and being fobbed off – It becomes pointless stating thou were unaware as that just betrays the incompetence and most definitely not being fit for Public office in the first place.
The reality is that we had 70 Whistleblowers in situ – 69 silent – 1 effectively sacked for speaking out – hmmm. One is now the Mayor.
We really have to take responsibility for what we are voting for as an electorate.
At least we can get some kind of answers from this report – and all thanks to the person/spiritual body that made it possible via the Editor and IC.
This response seems to totally misunderstand or ignore the difference between a cabinet member, an administration backbencher and the opposition. Labour in opposition now have far more power than the Tories did as a result of controlling the scrutiny committee (where the committee chair has powers to help, you know, scrutinise. Unlike Government, opposition in a local council is almost totally powerless. Tories used to moan about having to FoI basic information.
What exactly has Kerswell done since she’s been in post? She’s covered up the Penn Report, failed to address serious problems with the planning department and overseen yet more degradation of Croydon. Perry made big promises but is silent. We are now paying for two leaders of the Council – they should have been all over this. Yet no one has been held to account.
What big promise did Mayor Perry make that’s been junked since May? Seems to me he’s doing exactly what he said he would do. Said change wouldn’t happen overnight, and that it would take time to change the culture of the council.
I wonder what the Finance Department officials version of events is?
We will be coming to that…
I look forward to it
why havent the Fraud Squad been called in!!!!!!
I’m calling on Kerswell to be sacked. Everything she touches turns to shit. Why is she still in her job?
It was one of the worst things the Blair government ever did was to remove the ability to surcharge councillors and local government officers for financial missteps taken whilst serving/working in local authorities.
Surcharging ought to be reinstated.
And senior local government staff who are found to have wilfully or recklessly caused the sorts of financial losses described in reports in the public interest should lose pension benefits.
Surcharging and loss of pension would focus and concentrate minds when decisions are being taken.
I’m sorry but there’s no way Hall could claim he didn’t know about the loans. It was in papers during his time and before his sacking and never once did he say (that I recall) that there loans he never knew about.
So it’s either not Hall or he’s lying.
His fingerprints are all over this mess.