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.
EXCLUSIVE by STEVEN DOWNES
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
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