CROYDON IN CRISIS: ‘Incompetence or wilful pilfering’ of a ring-fenced account for social housing has deepened the financial hole that the authority has dug for itself
Croydon Council raided the supposedly ring-fenced Housing Revenue Account for nearly £40million, a shocked Town Hall committee was told on Monday night.
Council house: another £40m of misappropriated spending has been uncovered at the Town Hall
The cash-strapped council will now have to “refund” its HRA, which collects money from tenants’ rents and is only supposed to use the revenue to maintain its properties and build new homes.
Monday night’s housing scrutiny committee was told that £9.5million was being taken from the HRA each year for at least four years, a period which will have included a time when it was under the leadership of Labour’s Tony Newman, Alison Butler and Simon Hall.
Senior sources in Katharine Street have confirmed to Inside Croydon that this £40million raid on the HRA is separate to and additional to the £73million discrepancy related to Croydon Affordable Homes, one of the housing vehicles set up by the previous Labour administration, that was discovered earlier this year, where housing monies were being misappropriated to pay bills incurred by the council’s general fund.
The misuse of housing monies is one of the major reasons that the council’s auditors, Grant Thornton, have now been unable to sign off on three years’ worth of accounts at the troubled local authority.
The discovery of another £40million of misappropriated money was a major cause of Jane West, the council’s corporate director resources, last month issuing a Section 114 Notice, Croydon’s third in two years, and admitting that there is “no solution in sight”.
Debt hole: the misallocation of HRA money began when Alison Butler was in charge of housing
According to our sources, the latest discrepancy is a misallocation of homelessness costs, which should have been charged to the general fund.
The misallocations began when Butler was the Labour-run council’s deputy leader and cabinet member for housing, while Hall was the cabinet member for finance.
They, together with Newman, have since stood down from the council. Hall and Newman were both suspended by the Labour Party in early 2021, shortly after the council’s finances began to unravel.
The “misallocation” having been discovered by the council’s recently appointed corporate director for housing, Susmita Sen, will now have to be refunded from the pot-less council’s general fund to the housing account – and represents a significant factor in the latest S114 Notice, effectively declaring the borough bankrupt.
Said the senior council figure, “I simply don’t know whether the misallocations were incompetence or wilful pilfering of the HRA to prop up the general fund and help make the balance sheet appear a bit better.
“The latter, as well as dishonest, was pretty dumb because it was going to come out at some time. Both show a complete lack of necessary financial standards and governance.”
At the housing scrutiny meeting, Sen told the committee, “What we’ve established is that there has been an overcharge of the HRA for several years. These are for services that are general fund activity, such as the homelessness service.
“What we’re looking to do to rectify that situation is to return around £40million to the HRA.
“Whilst it is bad news for the general fund it is good news for the HRA.”
Sen warned that it was not impossible that other accounting discrepancies might yet be discovered. The £40million discovered so far dates back to 2019.
Read more: Council forced to issue 3rd bankruptcy notice in just two years
Read more: After nearly a year, Gove is sitting on two ‘improvement’ reports
Read more: ‘Uncertainty faced by all local authorities is unprecedented’
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at inside.croydon@btinternet.com
Inside Croydon is a member of the Independent Community News Network- By having a comment section, we provide all readers with an immediate “right of reply” on all our content. Details of how this works can be read by clicking here
- Inside Croydon works together with the Bureau of Investigative Journalism, as well as BBC London News and ITV London
- Inside Croydon: 3.3million page views in 2021. Seen by 1.6million unique visitors in that 12-month period
When are the Council going to be challenged and especially the likes of Newman, Butler and everyone else involved in leaving Croydon declared bankrupt for the third time in two years?
In these difficult times the residents of the Borough deserve so much more.
Surely by now we must be close to Misconduct in Public Office complaints over some of this?
According to Richard Penn, in a report that Kerswell has been sitting on, we were there two years ago. And that was *before* RIPI2 on the Fairfield Halls fiasco, with all that expensively acquired legal advice telling Kerswell what she should have done.
Nowhere in that legal advice does it say: “Do nuffink.”
Any comment from Stuart King ?
How come Butler is still a member of the Labour Party?
More to the point why have not the Finance Directors and CEO been questioned? Charging money from one area to another is a professional administrative action, not a Councillor matter, They are advised and take decisions on the advice. So no one said ”you cannot do this”. Or they did and someone told them to do this anyway and they did not whistle blow?
Is it time for this Council and those in charge to be really answering questions from the time of Mike Fisher onwards and every senior person who made decisions that are suspect.
Failure to do so will lend to few people ever having any faith or confidence in any utterance from any part of Fisher’s Folly.
I find it saddening to read continually of what has been happening within Croydon over the last few years. Croydon has become something of a laughing stock. The depressed state of the area around North End with empty shops, the rubbish around the entrance to the old Allders cut through to George Street, people curled up in doorways and underpasses, and the general state of the town centre all bear witness to the depth to which Croydon has sunk.
Is Katherine Kerswell the elephant in the room?
A bit unfair on elephants. They are quite intelligent creatures!
Unbelievable. What else is going to come to life
Where is the accountability ? What exactly have the councilors being doing for years? Many to include Jason Perry, the elected Mayor and Leader have been councilors for many years. Why did they not raise concerns and enforce those concerns if appropriate? The numerous independent reports make the position very clear . Yet still the terrible problems remain .What has happened to the police investigations? Has a report been made or referral? Croydon residents deserve so much better . Well done to Inside Croydon for raising the position. Good journalism .