There was something archly cynical, and deliberately misleading, about how Croydon’s Conservatives turned Tuesday’s announcement of the borough’s bankruptcy into an exercise in political point-scoring. None of which will help the borough’s residents, writes ANDREW FISHER
Croydon’s Conservative councillors were quick out the blocks on Tuesday morning to blame the previous Labour administration for the Section 114 Notice that the council had just issued under Tory Mayor Jason Perry.
They even had ready-to-go a well-produced, if factually questionable, video of Jason Cummings, Perry’s cabinet member for finance, to explain some of the borough’s financial problems. The mini-movie tweet was published at 10.02am – just two minutes after the formal S114 Notice had been made public by council officials.
Another councillor, Luke Shortland, who represents Coulsdon Town ward, was one of several who put forward the carefully orchestrated line that “servicing Labour’s debt costs about four times what it costs to empty Croydon’s bins!”
Croydon Council’s debts are estimated to be around £1.6billion. What Conservative councillors have omitted to mention was that in 2014, Labour inherited more than half of that debt from the departing Conservative administration, of which Perry and Cummings were cabinet members. Croydon’s debt is very much a joint enterprise.
There was also no acknowledgement that, in some part, the disastrous Conservative Mini Budget in September is what has led to debt costs rising as interest rates rose. On the Tory front bench in the Commons that fateful day, as the No2 official in the Treasury to Kwasi Kwarteng, was Chris Philp, Croydon South’s MP.
Despite being sacked as Chief Secretary to the Treasury for his part in that costly debacle, Philp had no shame this week about joining in with the Tory pile-on over Croydon Council’s latest S114 Notice.
The Office for Budget Responsibility reported to government recently “the near-tripling of interest rates since March means the share of revenues consumed by servicing that debt rises… leaving the public finances more vulnerable”. Croydon’s debt crisis has been made in Westminster as much as Katharine Street.
Tory councillors really should understand this.
Mayor Perry himself raised the issue in his November 10 letter to the Levelling Up Secretary, Michael Gove, requesting a new bail-out, or “capitalisation direction”, saying that the situation “is only likely to worsen as interest rates rise”.
The Tories’ partisan finger-wagging this week does nothing to protect services or deliver services for the people of Croydon. The reality is that council funding in Croydon has been unjustifiably low for decades. Croydon is not alone: many councils across England are in huge financial trouble.
Just before the autumn statement earlier this month, the Conservative leaders of Kent and Hampshire county councils wrote a letter to the government calling for more funding, saying: “We have experienced more than 12 years of national austerity and cuts to our core budgets.
“Inflation continues to grow, along with demand for services such as social care for vulnerable adults and children.”
The two Conservative leaders pleaded for extra funding, or else “two great counties sleepwalk into a financial disaster”.
The Conservative leader of Devon council has also warned, “the situation facing councils is becoming intolerable”.
Councils in Slough and Northumberland have also issued Section 114 Notices. Others, such as Thurrock, Spelthorne, Woking and even near-neighbours Bexley, have been given millions of pounds in government bailouts in recent years. And it was Tory-run Northamptonshire that fell first, when that county council issued a Section 114 notice in 2018.
According to analysis from Grant Thornton, up to 60 councils risk running out of money in 2023. Across all councils in England, budget deficits are expected to reach a cumulative total of £7.3billion by 2025-2026, an increase of £4.6billion since forecasts made at the beginning of 2022.
The chair of the Local Government Association, James Jamieson, said: “The future financial sustainability of councils and local services is already on a cliff-edge.”
Geoff Winterbottom, principal research officer at the Special Interest Group of Municipal Authorities, said, “We have never seen more pessimism among councils and in particular council finance officers.”
The amount of funding from central government received annually by Croydon has shrunk by around £58million a year since 2015. It is being asked to provide more with less funding.
As more people become unemployed in the next year, then Council Tax revenues will fall. As more businesses in the borough close or fail, then business rates revenue will fall, too.
Croydon is being squeezed on all fronts – and starts from a bad position made worse by poor decisions of successive administrations.
The previous Labour council’s commercial strategy, under then-leader Tony Newman, was a policy actively encouraged by Tory government ministers, as they sought to reduce grants to local authorities and offered “cheap” debt for councils to buy up properties to create revenue.
That strategy collapsed even more spectacularly in Tory-run Thurrock – with the administration allowed to borrow an eye-watering £850million in October following its dalliance with dubious investment companies.
And it is not so long ago – in 2019 and 2020, just before Croydon’s first S114 Notice – that Mayor Perry, then in opposition at the Town Hall, was voting in favour of the Labour budgets he now claims bankrupted the council.
If there was a lack of oversight – whether of Croydon, Thurrock or any other of the many councils across England that are now in dire financial straits – then the Conservative government bears much of the blame.
In 2010, Eric Pickles, the then Secretary of State disbanded the Audit Commission which oversaw and delivered inspections of local government finances.
Then there is the issue of the specific underfunding of Croydon.
As I have highlighted before – even now, after more than a decade of cuts to council funding, Croydon gets just £228 of government funding per citizen, compared with the £450 per person paid to neighbouring Lambeth. It is not as if Croydon is without areas of deprivation, as well as having a geographically larger area to serve.
If Croydon’s funding per person was brought up to Lambeth levels, it would provide an estimated £65million per year extra that Croydon would have to spend on services and help for its residents. When Croydon issued its first S114 Notice in November 2020, it was because of a budget shortfall of £63million.
The fault for Croydon’s current predicament lies with both local parties, and successive Conservative governments that have cut funding.
The blame game is only a distraction. What matters is how to put it right.
Every local councillor, the Mayor, and Croydon’s three MPs, should have a shared interest in lobbying the government to get a fairer funding settlement for Croydon – arguing for parity with neighbouring Lambeth, and backdated.
Croydon cannot achieve financial stability just with another round of cuts, when it is already providing a worse service to a population more in need than ever.
- From 2015 to 2019, Andrew Fisher (pictured right) worked as the Labour Party’s Director of Policy under Jeremy Corbyn. He is the chair of the Croydon Central Constituency Labour Party. Fisher is also the author of The Failed Experiment – and how to build an economy that works, and now writes regular columns for InsideCroydon in a personal capacity
Some of Andrew Fisher’s recent columns:
- Higher energy bills, higher tax bills and worse public services
- The £30m in the balance for Croydon in Chancellor’s Budget
- #TheLabourFiles: It’s long past time to clean up the Party
- Forde Report exposes racism, bullying and factionalism in Labour
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