CROYDON IN CRISIS: Conservative Mayor, with help from the local Tory MP, has overseen a disastrous few months for the borough’s finances.
By WALTER CRONXITE, political editor
Pension plop: £130m has been wiped off the value of the council fund since March
The Croydon Council pension fund has had £130million wiped from its value since Jason Perry took control of the Town Hall as the borough’s Mayor.
Those stark figures were confirmed at a meeting of the council’s pensions committee – before part-time Perry announced that the borough had declared itself effectively bankrupt for a third time in two years.
A big chunk of the council pension fund’s massive losses occurred when Perry’s Tory chum, MP Chris Philp, was at the Treasury helping to cause havoc in the financial markets alongside KamiKwasi Kwarteng during the brief but chaotic premiership of “Thick Lizzy” Truss.
The Croydon pension fund’s vast losses have occurred on Perry’s watch after the part-time Mayor put two Labour councillors in charge of the kitty – Callton Young and “Thirsty” Clive Fraser.
Young and Fraser had both been given jobs during the discredited leadership of Tony Newman, whose autocratic mismanagement led directly to the borough’s finances crashing the first time in 2020.
Pensioned off: ‘Thirsty’ Fraser (left) and Callton Young, the Labour councillors who chair the pension committee
Tory Perry may have won the mayoral election held in May, but Labour has the largest number of councillors at the Town Hall, which has led to some committees and functions being chaired by what is officially the “opposition” group.
The £130million in lost value is equivalent to the exact amount of the savings needed and that Perry says he can’t find in his budget for the next financial year.
On Tuesday, Mayor Perry took the unprecedented decision to issue a Section 114 Notice pre-emptively – predicting that he would not be able to balance the council’s books in 2023-2024. It is thought to be the first time in the history of local government in this country that a council has issued a S114 Notice in advance of it going bust.
The £130million lost works out to £330 for each and every man, woman and child in Croydon.
The official council report to the pensions committee by Matthew Hallett, the council’s “head of pensions and treasury”, covered the period for the quarter to the end of June 2022. In just three months, the council lost £89million in equities, with its fossil fuels-free investment performing better than its other equity investments.
In bonds the council was £17.7million in the red.
The council has to make payments into the fund to provide for the pensions of past employees, and for the pension fund of current staff. When the fund was doing well, as was the case until May this year, the cash-strapped council was able to reduce its contribution by as much as £6million. That probably won’t be possible now since such significant value has been wiped out.
Pension rot: the official council report on the massive financial damage done to the pension fund in just a few months. And then came Chris Philp’s spell at the Treasury…
Just before Perry came to office, Croydon Council’s pension fund had grown to £1,731.3million after several years of savvy stewardship by Andrew Pelling – before Fraser and his mates forced him out of the Labour Party and off the council.
But with Fraser as vice-chair of the pension committee chaired by Young, the fund lost £97.5million over the summer, down to £1,633.8million.
The committee meeting was told by Hallett that he estimated that around another £33million disappeared in the period to the end of September, as the markets collapsed in response to Kwarteng and Philp’s notorious Mini Budget. The official said that the pension fund was worth “£1.6billionish” by the end of September.
The council official said that it might have all been even worse but for the fund’s diversification into well-performing infrastructure investments and into property. He said that he was still 75per cent confident that over time that the council’s pension fund would rise by an average of 4per cent a year.
In the six years from March 2016 to March 2022, the previously poorly performing pension fund doubled in size.
But Labour councillor Patricia Hay-Justice cautioned that assumptions by council officials about performance “doesn’t reflect the volatility that [market] conditions have for the next few months”.
The councillors are not going to review changes to the fund’s investments for the next three to six months, the fund’s financial advisor told them, whatever those risky markets.
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Oh, come on. Get off your anti Jason Perry horse. There is not a pension fund in the UK that has not lost money since the start of the Ukraine war. By all means highlight poor decisions etc but keep it genuine and true.
Perry stood for elected office. He needs to take responsibility for what has happened on his watch.
If he isn’t up to the task, he should stand down and let someone more capable deal with the issues.
Totally correct. I think most pension funds are down 10-25% with US markets and bonds being major contributors. Mine own personal pension is down and I manage it actively and have kept a sizeable portion in cash.
A guy called Matthew Hallett oversees the Croydon Council Pension Fund investments with Mercer as Investment Advisors. Perry isn’t even on the committee. Unfortunately the way pension funds work mean you can’t make changes quickly. Management of the underlying investments will have been appointed to different fund managers (17 according to the 2021 report) across the city all with strict guidelines and remits.
If you want to appoint a new manager you have to go to RFP and undertake a long process to prove proper oversight.
I’ve had a quick look at the 2021 report and the asset allocation looks relatively low risk. Unfortunately not much has gone up in the past year other than oil & gas.
The shares could go up again. Fingers crossed they do.
The report says they will. But at 4% per year… This at a time when hedge funds made billions by gambling on the markets.
They also lose but they never tell you that bit
Absolutely agree with you. Andrew Pelling has enormous experience as a former MP, Councilor and banker. Far better placed to act .How much more serious dos it need to get in Croydon ?
Bring back Pelling! He used to make a profit !
Yet another reason for regretting the sacking of Andrew Pelling by the Labour Party.
Putting a boozer who took possession of stolen data in charge of our borough’s multi-million pound pension fund. What could go wrong?