10 Responses to ‘There is no solution in sight’ warns council’s finance chief

  1. Terry McCarthy says:

    I have seen no reference as to whether our Borough, bankrupted by Newman, Butler and co, to the tune of £1.4billion, is required to pay interest on our debt. If it is, Croydon Labour will have afflicted the Borough for many years to come. Is there any formal investigation in hand. I sincerely hope so because I do not believe it is possible to lose so much money, even with gross incompetence, without some nefarious illegal activities by those in charge.

    • The borough was not bankrupted by its debt.
      It was bankrupted by the over-budget spend – councils must, by law, deliver balanced budgets.

      Councils across the country have been encouraged by government to borrow billions at historically low interest rates to speculate on commercial property.

      Croydon’s borrowing, mainly from the Public Works Loans Board, would have been very long terms loans at fixed low rates. The suggestion, as made by Croydon Tories, that servicing these loans has in some way changed since Chris Philp and their mates at Westminster crashed the national economy is misleading, deliberately so.

      • Sarah Gills says:

        Yep pretty much this. Councils have the situation where they have limited tax raising powers and have had central government cut so they’re running on empty. Croydon had thin reserves for years – under Tory and Labour administrations- which didn’t help. A toxic combination of ineptitude and austerity brought us here. It could be argued that the s114s should have come earlier instead of trying to muddle through.
        I think the demise of the Audit Commission has a lot to play here as they’d have flagged the issues a lot sooner with a greater depth of understanding of how local government finance works, which is lacking in external auditors who just don’t have the same in depth knowledge or training that the Audit Commission provided.

  2. Ian Kierens says:

    Prepare for a Council tax hike – but even that may not be enough to cover this debt burden.
    More to the point this is waste money – the Debt burden is and will become unsustainable in the short term without serious write off and or Government funding. Even loew interest and longer terms are not really acceptable for this Borough to regrow and regenerate.

    Local Councils should never have been able to speculate with ”future revenue” money which in effect Newman and Fisher did and both left huge debts. That was there decisions and actions that did that. However it was the Framework and Regulations that were unfit for purpose and failed to prevent this happening.

    So either Gove should be looking at the Local Government Act and long term funding or Kerswell needs to release the investigations to the Police and /or a public investigation.

  3. Leslie Parry says:

    Also at a recent presentation following questions raised by Tenants Representatives the Housing Revenue Account has a balanced budget of 91m( Tenant & Leaseholders money) but the previous administration’s have accumulated 324m in loans using the HRA( our money) as collateral. But are only paying off interest if 12.5 m a year. I am pursuing this issue as a lay advocate and I am a council tenant no politician or manager aske the people if they could use my money for these loans. It’s the same people who created and didn’t resolve slum housing. I challenge any Labour Politician to a public debate in housing and housing finance.

  4. In line with the Government’s gloomy prognostications there is one thing one can be sure about Croydon: its all going to get worse before it gets even worse later. ‘Twas ever thus, at least for the past eight years, and will always be.

  5. derekthrower says:

    It would be interesting to finally have transparency regarding what exactly is the technical dispute with regard to the HRA. Being this issue would have been known during the first centrally administered bailout it seems a complete failure in governance to have resolved this issue. We have to assume it has something to do with that flightless albatross Brick by Brick and the depreciating asset value as the economy goes into a sleep until at least 2024 by current forecasts. All this imprecision regarding whether the council might be able to meet the arising deficit or might not be able to meet it arises because of this unresolved uncertainty?
    I would disagree that the fundamental issue is not the stock of debt run up by both political parties because all the remedies being asked by the Council side regard either write off, additional capital, reducing debt charges or extending payment period to enable them to set a budget.
    So it seems uncertainty along with the requirement of legacy adjustments to the context of the crashing economy of autumn 2022 bring central Government deeper into the mix of the deep malaise that is Croydon Council. Looking at the ever growing number of local authorities in deep financial trouble the issues are beginning to look systemic rather than sporadic one offs. It is difficult to think there are local authorities that are in a worse state than Croydon.

    • Terry McCarthy says:

      BUT…how much interest does the Council pay on Newman’s huge debts and is a formal investigation into the losses being made? There was talk of an audit but nothing has been heard or published to the best of my knowledge.

  6. Lewis White says:

    My impression is that since Mrs T abolished the GLC, and during the decades of “Austerity” in particular, local government has suffered a death by a million cuts.

    There is also the “bad master” /slave relationship.
    The theory is that the more you starve but also beat the slave, the more work you get out of them.

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