Council forced to issue 3rd bankruptcy notice in just two years

CROYDON IN CRISIS: Last week, Jason Perry was admitting that ‘things will get worse before they get better’. Six months after taking office, the Tory Mayor is begging for another government bail-out.

Bankrupt: part-time Mayor Jason Perry

Croydon Council this morning issued a Section 114 Notice, effectively admitting the authority cannot run a balanced budget because of a newly discovered £48million black hole in its accounts.

In a statement, the Tory Mayor, Jason Perry, sought to pass the buck onto his predecessors, claiming he needed more government aid because “historic financial mismanagement has left the authority… operationally unsustainable”.

It is the third S114 Notice issued by the council since November 2020, and comes despite a then-record £120million in bail-out cash handed to Croydon by the government.

The S114 Notice comes six months into the administration of Perry, the borough’s first elected Mayor, who took office shortly after the council had issued a balanced budget for 2022-2023 which was signed off by a government-appointed improvement panel.

Within weeks, it was clear that Perry, and the council chief exec, Katherine Kerswell, were struggling to keep to the tight spending limits that had been approved, with an overspend of nearly £20million accrued in the first 100 days of his mayoralty.

Perry chose today – the 32nd anniversary of Margaret Thatcher being kicked out as leader of the Conservative Party – for a roll of the dice over his own leadership of Croydon.

The latest doom-laden announcement makes it a real possibility that the government could take power away from out-of-their-depth local politicos, like Perry, and instal commissioners to run the authority full-time, as they have done with a handful of other struggling local authorities in recent months.

Doom-laden: the latest Section 114 Notice issued by Croydon Council this morning

Kerswell, who has been in the top job at Fisher’s Folly since October 2020, could also be “moved on”, as has been the case with chief executives at bankrupt councils such as Slough and Thurrock.

Unlike Croydon’s first S114 Notice, this latest announcement, formally from Jane West, the council’s chief finance official, came without any warning from a Report in the Public Interest from external auditors Grant Thornton. The auditors have so far refused to sign-off on two years’ worth of council accounts, in the main because of an unresolved £73million of “ring-fenced” Housing Revenue Account money that has been used in other areas of council spending. Kerswell described this as an “accounting problem”.

The borough’s 70 councillors had been tipped off last night that a major announcement was imminent with the issue of a “General exception” notice. A “key decision” was about to be announced without the usual 28 days’ notice.

Big news coming: the notification issued to councillors last night

Just after 10 this morning, Mayor Perry had the propaganda bunker at Fisher’s Folly issue a buck-passing statement on his behalf – reinforcing the observation made by several Katharine Street sources since May that he is “in office, but not in charge”.

The statement read: “Croydon Council has said it will not be able to balance its books next year without extra help from government because the ongoing impact of historic financial mismanagement has left the authority financially and operationally unsustainable.”

Part-time Perry has sent a begging note to Michael Gove, the Levelling Up Minister, about “the financial issues he inherited”. The Department for Levelling Up, Housing and Communities has withheld the latest, supposedly quarterly report from its improvement panel since March this year, refusing to explain why.

In the council’s statement, they said that “the sheer scale of these [financial] issues means that the council cannot recover without a new government solution for long-term financial sustainability”.

Perry claims that his “Opening the Books” exercise “has uncovered more unresolved historic accounting risks, adding new costs of almost £48million to next year’s budget”.

Exit door: Mayor Perry and CEO Katherine Kerswell could lose their positions if the government steps in

Perry’s bleating extends to the economic crisis created by his Conservative parliamentary colleagues at Westminster, whose disastrous Mini Budget in September led to steepling interest rates – Croydon has £1.6billion-worth of debt which Perry says has “also become critical to the sustainability of the council’s revenue budgets with current interest rate levels”. Perry had been a senior cabinet member in Croydon’s last Tory administration, which left debts of £1billion when they lost office in 2014.

“The ongoing national economic crisis has also meant council services are more expensive to deliver,” the council press release simpered, self-pityingly.

There are still huge cuts in services to come, according to the council statement.

“Croydon is doing all it can to support its own recovery through its savings and transformation programmes, which have already delivered over £90million in savings and £50million in asset sales over the past two years, with further proposals for £44million in savings in 2023-2024 and around £100million in proposed asset disposals in the coming years.

“But it will not be enough to meet the council’s costs and ongoing toxic debt burden, which are just too big to manage in a sustainable way without further support from the government over a longer period.

“The council is estimating that it would need to reduce spending by £130million in the next financial year which would leave the organisation financially and operationally unsustainable.

“Although the council is on track to balance its in-year budget, chief finance and S151 officer Jane West has today issued a Section 114 Notice which acknowledges that the council will not be able to balance its budget in the next financial year.”

Perry blamed the unsustainable position on “a legacy of unprecedented financial mismanagement, toxic bad debt and a lack of governance and transparency that shames Croydon”.

He said, “The toxic level of historic debt means that Croydon is trapped in a vicious cycle. Even with government support, the coming years will be incredibly financially challenging for Croydon Council. Ultimately, this will mean the council needs to do and spend less, with significant spending reductions.

“I am determined to fix what the previous administration has broken and to protect our residents, our staff, and the borough as much as possible, but getting the council back on track to recovery and long-term financial and operational sustainability will take a long time and need radical solutions.

“We must balance our books and become a much smaller organisation, which is more efficient and delivers priority services that support our residents, our communities and the borough.”

Read more: What CEO Kerswell told staff in an internal memo this morning
Read more: Tories accuse Labour of ‘shocking mistakes’ over budgets

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
This entry was posted in Croydon Council, Improvement Board, Jane West, Katherine Kerswell, Mayor Jason Perry, Section 114 notice and tagged , , , , , , , . Bookmark the permalink.

38 Responses to Council forced to issue 3rd bankruptcy notice in just two years

  1. Ian Bridge says:

    Is it not time all the muppets supposedly in charge were kicked out and a team bought in to sort things, like if a school goes into special measures? This is not going to get any better and they clearly have not a clue.

  2. Kevin says:

    Is it time to give Croydon Council up as beyond hope and split the borough between Bromley, Lambeth and Tandridge? I can’t help thinking that everyone would be much happier with that arrangement.

  3. This is beyond embarrassing. Feels like it’s time to make an example out of current leadership now and bring in (hopefully) more competent individuals to get Croydon back into the black.

  4. derekthrower says:

    Well as your regular broken record commentator of affairs in Croydon. This proves there is no material difference between the two political parties that have led the descent of Croydon into sad and miserable decline. You would have thought old part-time would have spent more time trying to avoid this, but I don’t want to cry. I can only laugh.

  5. Surely the time has come for a clean out of the rot starting at the top. Only last week we read of circa £20,000 being wasted on Court action – supposedly, in part, to protect Croydon’s reputation. It’ll certainly have an enhanced reputation for something when this news gets about. In that significant financial troubles are predicted for next financial year I wonder what the soon to be due accounts for Brick by Brick are showing? £ millions at risk there. Didn’t Hamida Ali and Kerswell reassure us that finances we back on track? Must have been taking advice from Kwarteng.

  6. Billy says:

    Absolute SHIT SHOW….

  7. ExCroydonian says:

    Just sat through the staff webinar the chosen tool used to inform the staff, with the 3 muppets leading the council, with the CEO giggling and smiling while telling the staff how very serious this all is. Place is a complete joke.

    • Kevin Croucher says:

      Croydon Council is just institutionally incapable of running a whelk stall.

      • Lewis White says:

        Sorry Kevin, but there are no whelk stalls nowadays.
        They just can’t get the supplies (Brexit)
        nor the staff who are prepared to work for low wages (Brexit) nor the management (not enough rewards– CeO’s in the UK all wanna be CeO of Severn Trent Water)

  8. Peter Underwood says:

    Bankrupt under Labour
    Bankrupt under the Conservatives

    Croydon is still in crisis and we will all suffer because of their failures

    The community needs to come together to protect the most in need and demand changes at the top

  9. moyagordon says:

    We voted in the people who it looks like have mismanaged our finances so we have to bear the consequences and if it means big cuts in the short term, I suppose we don’t have a choice. Protecting the vulnerable should be the main priority, Children’s Services, Social housing and Social Care.

    • ExCroydonian says:

      Sadly it seems that they are more interested in ploughing ahead with the Borough of Culture next year instead of focusing on social housing conditions, vulnerable people and the cost of living crisis. So the mismanagement of resources will continue.

      • moyagordon says:

        Yeah. Maybe the council should pass on the Borough of Culture thing. It seems crazy to be spending money on anything other than really essential things when we’re bankrupt.

        • Besaga says:

          Borough of Culture funding isn’t drawn from local authority funds – it comes from the GLA, as a GLA scheme.

          • That’s not strictly true.

            The GLA makes a contribution, of course, but the local authority is also expected to provide some funding.

            How this works out since Tuesday’s announcement of the halting of all non-statutory spending, Mayor Perry has so far failed to say.

  10. Ian Kierans says:

    ”Historic financial mismanagement has left the authority… operationally unsustainable”.

    ”An unresolved £73million of “ring-fenced” Housing Revenue Account money that has been used in other areas of council spending. Kerswell described this as an “accounting problem”.

    We are in for more cuts to services, and more sales of Local assets.

    Kerswell’s description for the misuse of Public funds is the understatement of the Century so far.
    But it also sums up her attitude to that kind of act.

    So does all misuse of £73 million really just mean an accounting problem? On that premise the Negrini/Newman ”loans” to Debt by Debt boss was just an accounting problem. Oh never mind the S11D form is just another accounting problem.

    I am not sure we are on same planets. If the Bailiff turned up to take shit because one has

    So exactly what services does this Council provide that is not ring fenced Mandatory and Statutory.?

    Well we know of one. Using Council offices and services to waste time at high court in litigation against IC and it’s editor. So chalk one up for incompetence and waste. not to mention definitely wasting public money.

    Did this Council ever consider actually asking the Editor of IC to hold off publishing what it had on its website? Would not explaining to this editor the circumstances and perhaps the damage it may cause and requesting a delay in the public interest and appealing to his human nature for the good of the community?
    A judge asked and got a yes why not a Mayor or a CEO. How many libraries, disabled elderly and vulnerable children and adults could have done with those few thousands coming up to Christmas?

    But I digress (sorry)

    This Council may wish to not publish reports. It may not wish to give the details to us residents and seek to keep RIPI documents and wrongdoing under a chastity belt. But frankly this Council lost it’s chastity some time ago along but gained a reputation for non prudent acts and a whole lot of other accolades including rotten borough awards

    Being actually open and honest about the disasters and wrongdoing at this stage would be like giving penicillin to a syphilitic sore ridden person of the night.

    It might not wash off the stench and corruption from the body but it will eventually cure the illness and be a deterrence to others that feel they can create ”accounting problems.
    I am sure Mr Perry has done some good somewhere – it would be nice to know where – but one thing is certain, this Mayor’s missives are not even a placebo and do cause symptoms of reflux with projectile regurgitation on an increasingly regular basis.

  11. Jim Lennon says:

    Unfortunately, Jason Perry was handed a hospital pass similar to which the next national Labour government will get pretty soon. He has been left to pick up the pieces and do what is essentially an impossible job.

    I am sure this journalist in a few years will start writing sarcastic articles similar to this one when the Labour government starts blaming the previous administration! It is very easy to take pot shots at our elected officials when you don’t have possession of the full facts and don’t have to make any actual decisions.

    At least the Croydon electors did not choose a Labour Mayor which was incredible given the nationwide swing against the Tories and underscored how bad the local Labour administration actually was.

    I think we should keep Labour away from our local finances for at least a few more electoral cycles. They deserve to serve a long period of punishment for their ineptitude.

    In which case, we need to support Jason Perry and hope he does manage to persuade his Tory friends in government to send us even more money! The last thing we want is to have unelected faceless administrators bused in from Westminster to make cuts without compassion.

  12. Ian Kierens says:

    I can not get the ” accounting problem” comment out of my head.

    We are talking about the Ring fenced Housing Revenue account!

    We are talking about Regina road, all those emergency accommodation people, all those homeless, all those on waiting lists, all those that we in effect have a statutory duty and responsibility for. Not to mention a fiscal responsibility to use money (obtained and given) for the purpose of providing a home for those needing a home in this Borough.

    £73 million!

    Can one imagine a resident saying in Court

    Sorry M’Lud I used the working tax credit money from the Government that was ring fenced for my rent for a medical problem. I alleviated said issue temporarily each week with a CBT leisure activity.
    With all the cuts about – my mental health was suffering. Sadly with no mental health provision and those mental health charities not able to provide a service to meet demand – I invested in some Cognitive Behavioral Therapy and had a respite from all the (Totally Tory caused) cost of living shit impacts at the local hostelry with my partner and a tram to the park with the kids along with some food for a cold picnic lunch. Sorry about the bbq but we needed the heat – it was not to cook the sandwiches. The mites were a bit chilly!

    I tried to keep it local to support my local community with its business rate payments and the debt caused by both the Local political parties (Labour and Tory) Cos if those last few entertainment areas closed – Bethlem would be packed to the rafters with tents in the fields.

    Thankfully for the last few months it worked wonders. there was the added value of not going off sick with stress and becoming a big burden on the state.

    Well I appreciate the rent to the Landlord who is letting the mould infested rooms to us is contracted by the Council to provide this on their behalf at very high rents and has got to be paid somehow. So can we ask the landlord to cut the rent to an affordable rent? I know its a ”perfectly legal development” but the oven is unaccessable as there’s a pillar in front of it and the washing machine is plumbed in to the outside tap in the garden we have had no lockable bike store for months nor bin storage. perhaps a discount?
    Maybe the Council can cut the tax with the cuts to the services they are no longer providing?
    Perhaps my Employer the NHS can give me a raise in pay?
    ? Maybe the food bank will have more donations even though more supermarkets have moved from Croydon and maybe allow a bit more food in the packs?

    Maybe the energy supplier can reduce the heating and hot water cost. Maybe the Government can reduce the cost of energy by not ring fencing it to an unsustainable gas price for a couple of years in the Countries interest?

    I appreciate with all the cuts there are no materials or resources to improve the London Road but maybe I can donate 20 hours a week to Voluntary work in the community to repay in kind doing first aid outside hospital A+E and reduce the waiting times for more urgent cases?

    I would do more, but sadly the rest is used for doing bank shifts to pay for transport clothes and kids. I know I am doing over 100 hours and am shagged tired. I know perhaps you may think this is unsafe but the Health minister is aware of the long hours we do and is happy about that shit. The HSE is also aware and is extremely quiet about it. We would like to have asked for a sustainable pay increase of about RPI with a slow increase to the correct rate of pay for all NHS staff as there is a National crisis caused by the Conservative parties politic’s and competence. But the Minister does not want to talk and does not want to give us any more pay or reduce those hours and instead bleats about a high percentage being claimed by unions which as he well knows is not the full facts.

    So ever so sorry I can only sleepwalk for those extra 20 hours without being fully comatose!.

    Would it be wrong to suggest that those with unpaid debts to this Council please oh please mention to whomever that it is just an accounting problem and would they accept a S114 or its equivalent as a stop gap?

    There are severe issues facing this Country and we have to be careful now with every penny in the public purse. Cuts are not always the answer and neither are higher taxes, wages etc. Better usage and better productivity along with ridding all unnecessary waste usually helps. But sacrifices should be equally shared and that is not what is happening in Croydon to date. Seemingly we are being led by an accounting problem.

    The Planning ”perfectly legal development” is dead.

    Long live the Kerswellian”Accounting Problem!

  13. derekthrower says:

    Bleat, bleat, bleat. After huge swingeing cuts to services and a big handout from Central Government the Council was giving a clean slate. The real reason for the decline is the worsening national economy deflating demand everywhere and the increased price for debt management due to the disastrous Truss fiscal event. You can’t blame a Labour Council for everything. Time for Tories to own up to how they are wrecking the country. They just make things worse year after year after ….

  14. Lancaster says:

    At the civic center, Kerswell, tier 2 and all tier 3 officers need to be expunged. After 2 years of special measures, clearly they have no grip on the situation. These people have a history of failure and bullying. The same should happen with the elected members.

    Bring in external overseers to review and run what has clearly been a sh!t show for years.

    Let us also see the Penn Report in its entirety.

    How long can the administrative and political incompetence go on. All the while the inept draw 5 and 6 figure salaries without accountability.

  15. James Seabrook says:

    What has astonished me is that at no point that I’m aware of has anybody in government stepped in to really sort out this problem at source. In fact all I can see it doing is pumping good public money after bad.

    Croydon Council shouldn’t be bailed out with no strings attached – nobody knows what’s happening to the money. For example the £20,000 on a baseless claim against Inside Croydon which the judge threw out with good reason. That’s one of the bad uses of public money we did see… what about the others that are secretly hidden away.

    What I see in this whole dreadful saga is people who realise that if they can rise to the top of a Council they can do as they please with no accountability and help out their chums with public money, whatever party they represent.

    As both Government and Councils are elected by the public I don’t know how the law stands between them. However in such a diabolical state as this I would think there must be some way of forcing such utterly inept and self-serving people in the senior ranks out of office. If there isn’t then something should perhaps be brought into law about this so it doesn’t ever happen again.

    • Thing is, James, this appears to be the first “pre-emptive” S114 in history. The council is not effectively bankrupt… not yet, anyway.

      But it might be in 2023-2024.

      That’s after a year operating on a budget that was signed off by two government-approved S151 officials – West and Richard Ennis – and approved by the DLUHC’s improvement panel.

      So what’s happening here? Croydon and Gove have already had “talks”. Gove has withheld from the public at least two reports from his improvement panel.

      This admission, by Tories, that civic finances have been so badly eroded as to be unsustainable could be a political gaming of the S114 system, ahead of a 2024 General Election in which Jason Cummings is expected to be a candidate in a marginal constituency.

      And all paid for by us!

  16. D Wilson says:

    What can us residents of Croydon do to help this dire situation? There must be something!

    • They could stop voting the same shower in time after time, regardless of how badly they perform. Sadly, the borough is so profoundly split between North and South, that this is never going to happen.

      • MatthewP says:

        We would need to form a local party of exclusively Croydon residents, essentially new to politics, but from local business, minority, educational, housing, sport and entertainment sectors. But it’s expensive. How much does it cost to set up and maintain a political party?

        • Nick Davies says:

          In some areas residents’ associations field candidates, usually due to local issues, though they often seem to end up voting with the tories in a nominally hung council. But there is always a danger that they are dominated by fruitcakes, loons and closet racists (© Cameron, D). And road campaigners.

          • 2deal2 says:

            If so, then Croydon needs to be professionally run by a third party that can pay for all of the services from a private investment.

  17. Billy James says:

    Questions need to be asked about Jason Perry why he is claiming £80,000 +expenses per annum when he only works part time?

  18. Lewis White says:

    Croydon Council staff have been suffering –so many have been made redundant, that the Roman term “decimated” –losing 1 in 10 of the soldiers- may well be put into the shade, if things contiue to go badly, by a new term — “Croydonated”- 9 out of 10 being lost.

    • Sarah Bird says:

      Like many disabled residents, I have really suffered as a result of Croydon council’s numerous statutory and Moral failings. Not even a grab rail in excess of 8 years ; therefore I do not think it is staff shortages . I am far from alone ,as I was cheerfully informed when I raised this, at the Mayoral Hustling’s together with the Nolan Principles. Many elderly and other residents have suffered too.. Has the money been chased yet ,as both Andrew Pelling and Richard Howard advocated at the Mayoral Hustling’s ? many questions that need to be addressed by Jason Perry as the Mayor and the leader and Katherine Kerswill CEO together with the paid councilors , where exactly has the money has been expended in an open debate , open to all and the press to include the excellent IC?

  19. Lewis White says:

    We’re all doomed, Captain Mainwaring ! Och aye. Doomed!

  20. Lewis White says:

    I hear that a Magic Money Tree protected by a Tree Preservation Order used to grow in the grounds of Taberner House, on the boundary with Queens’ Gardens.

    Reputedly, it grew from a pip thrown out of an upper window in the former Borough Treasurer’s department in 1965, one lunchtime, by a young clerk whose name was “Jack”. For 50 years the plant grew and grew almost as high as the council offices, and gave yearly crops of golden beans! Then, one day, when it reached maturity, it grew gold coins instead!

    Unfortunately, it got chopped down at some point during the Covid pancdemic by persons unknown, behind the site hoardings, while clearance operations were being carried out to prepare the site for the new high-rise residential blocks on the site.

    Residents will be glad to know that they have a final chance soon, to see this arbricultural and financial marvel, because an interactive hologram of the departed tree will be projected in the Queens Gardens between dusk and sunrise for the whole of the London Borough of Culture celebration year !

    The unique feature of this art work is that, as the viewer reaches forward to grasp one of the shiny coins or high-value banknotes from the MMtree, the money literally disappears in slow motion ! There is absolutely nothing that the participating person can do– the money fragments into pieces on contact and runs through their fingers, leaving, for just a few moments, a few sparkles that give a happy feeling of wealth, but which then depart, leaving the viewer empty-handed and feeling short-changed.

  21. 2deal2 says:

    This sounds incredibly desperate but it looks like an alternative could be a consortium of multi-millionaires or venture capitalists set up a party, prove they can clear the debt (literally pay it off), win in the next council elections and fix up the whole town to make it appeal to people of all classes. It’s clear that the politicians of both parties cannot manage the council or attract investment/negotiate deals.

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