Gove’s funding increases have come too late to save Croydon

London’s precept to add nearly £40 to average bills, as Mayor Perry asks government permission for increase of at least 10% for Croydon’s Council Tax, reports WALTER CRONXITE, political editor

Big increase: Croydon’s £81,000 per year Mayor Jason Perry

After 12 years of Tory austerity, the government has taken its foot off the brake on local council spending.

It’s all too late for cash-strapped Croydon, where part-time Mayor Jason Perry, despite promising to fix the council’s finances, threw in the towel just six months after being elected.

Mayor Perry’s cabinet member for finance, Jason Cummings, has confirmed that Croydon Council is set to become local government’s first Enron-style debt defaulter.

London boroughs’ resources have been drained by 22per cent in real terms since the austerity boys Cameron and Osborne came to power in 2010. While more than £1 in every £5 has been taken from London’s Town Halls in that time, the capital’s councils were meanwhile being expected to cope with a population that has grown by 7.7per cent.

It’s a sure sign that there is a General Election pencilled in for next year that councils across the country are being allowed to spend more by a government keen to have fewer negative headlines than in 2022. A real terms increase in spending for London councils of 3.9per cent might not be enough to completely transform the Tories’ election prospects, though.

The analysis of the turnaround in spending controls offered by umbrella organisation, London Councils, is graphic.

The government’s obsession with winning seats outside London and its conflict with London Mayor Sadiq Khan does, however, mean that London gets the lowest spend increase in the country. Inner London boroughs are getting more of the increase than councils in outer London.

Too little, too late: London Councils’ graph of CSP – core spending power – shows how the capital was squeezed hard for a decade, compared to the rest of England

It is the outer London boroughs, including Croydon, who already have the worst funding per head in the country. This in part explains why Labour in Croydon got drawn into high-risk strategies and dodgy accounting schemes when they had control of the Town Hall.

The spending release does, though, come at the cost of allowing bigger Council Tax increases.

Mayor Khan’s drifting administration at City Hall has become mired in its spats with central government, mostly over the post-covid funding package for Transport for London.

Now, he has just confirmed that the Greater London Authority will be raising its Council Tax precept by 9.7per cent from April,  adding £38.55 to average bills, mostly to help fund the Met Police and London Fire Brigade.

And this, in the middle of a cost of living crisis, is in addition to the amounts Croydon householders will pay to the borough council for what’s left of our local services.

Mired: London Mayor Sadiq Khan is increasing the GLA’s Council Tax precept by nearly 10%

Perry’s council is seeking special permission to raise its taxes by at least 10per cent, even though Croydon is already charging the third highest Council Tax in Greater London, while its Mayor is promising reforms to turn it into a “minimal council”.

There are 12 main funding sources for local councils from central government. Funding flows and formulae have become so complex that it is hard to work out exactly how each council is going to get treated, especially as not all the allocations have yet been published. But there are signs that the Tory government is already treating Croydon’s Tory council better than its Labour predecessors.

For example, while the Settlement Funding Assessment is only going up by 0.5per cent, Croydon is to get £4.8million extra out of the £17million going to the 33 London authorities as a whole.

This helps Councillor Cummings, who busy trying to sort the council’s finances while the borough’s £81,000 per year Mayor gurns for the PR photos.

Cummings and the council’s finance director Jane West have both expressed their hopes that Croydon will be allowed to default on its debt, becoming a kind of Enron or Lehman Brothers of English local authorities.

Cummings says that previous capitalisations, allowing the council to sell assets to cover extra government loans that pay for day-to-day spending, will not solve the council’s problems. For Cummings the council has run out of road.

“All capitalisation directions do is increase the council’s debt position and delay the inevitable,” Cummings told Inside Croydon.

“My reference at last month’s council meeting to a ‘final’ deal was deliberate, but refers not to an existing deal but to the need for a solution (or ‘deal’ or however anyone wants to describe it) to be one that actually allows Croydon to escape from its current position. I draw this distinction as the previous ‘deal’ did not do that.

“Indeed, further capitalisation deals on their own would also not achieve that.

“We’re trying to do a deal but are quite a way away from getting one,” Cummings said.

Read more: Council forced to issue 3rd bankruptcy notice in just two years
Read more: ‘There is no solution in sight’ warns council’s finance chief
Read more: Croydon needs deal that could set precedent for all councils



About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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2 Responses to Gove’s funding increases have come too late to save Croydon

  1. derekthrower says:

    You hear them say a local authority isn’t really bankrupt when it issues a section 114 notice since it is a matter of not being able to make new spending commitments rather than dealing with old ones. Defaulting on debt is a matter of bankruptcy and breaking obligations and financial confidences. These maybe made to Central Government who are really the authors of this mess by continuous suppression of local government funding while increasing the demands placed upon them and further abandoning any oversight of how the debt they provided at low rates was being utilised on unsecure projects. Croydon is not alone in all this and unbelievably others have acted even more recklessly. So if Cummings thinks his special relationship with former employers in Central Government is a done deal, he may have another thing coming since how can a Tory Party preside over defaults of accumulated billions for some councils while not dealing with the problems of others.
    Their incompetence in public finance strategy has reached the inevitable endgame and it is Westminster that will be trying to deny the inevitable rather than the inept Cummings & inane Perry in Croydon.

  2. Ian Kierans says:

    Mr Cummings is really stating the blindingly obvious that was evident a few years ago.

    Three culprits are involved in the debt – but that is not the issue here.

    Fundamentally the Borough has over extended and cannot pay.

    That is it. The why and how does not get away from that fact.

    Everyone can play about and naval gaze but the reality is if Mr Perry increases Council tax, this will fall disproportionately on those that actually pay that tax and receive no government/taxpayer relief. Some could say that may be conservative voters but this transcends political leanings and it would also be a poor and inaccurate generalist view.

    Simply those that pay tax have the resource and ability to move out a lot easier than those that do not pay. That is just factual economic reality. It does not mean they will.

    But one can move to an area with better services and no Council tax increases over the norm and to areas that actually have facilities and less drawbacks. They can rent out their property or sell to a developer and voila can even turn a profit. When things settle move back in or not
    When they move so the businesses that they spend with struggle and downsize or leave also. Crating not just a downward spiral but also a climate that no business will move into without grants or financial support to minimise their risks

    As those that pay disproportionately move out. more of those requiring assistance to pay rent/tax move in. More HMOs, bad developments, and other private developments many which may be good. But more and more money comes from the Public purse to fund that.

    This equates to more money from Central funding going to pay this ”debt” until the reality becomes that the Government and Taxpayer is paying over 90% of it.

    In the meantime Croydon continues to spiral into decay and more of it becomes a ‘no go’ area sucking in ever more NHS. Police and Fire Brigade resources or is just left to disintegrate. All costing the Government and Taxpayer more.

    What philanthropist in their right mind now would donate or leave anything to this Council?
    Look at this Administrations record of managing those assets? Most realise that it is likely to be sold and will never be used for the benefit of the boroughs residents.

    Who would want to even Volunteer for anything to help this town and it’s people? Many do and are not always recognised for that. But look at how this Administration has cuts the support and more to the point how this has been done.

    The Body is not just financially bankrupt!

    Fundamentally parking that debt elsewhere and dealing with it so that the Borough can grow and regenerate is probably the only way forward.
    But that will require also a fully competent and efficient administration.

    It needs 70 effective and noisy Councillors all working together for the Boroughs interests and not their parties political agenda. It require a majority of residents to trust and participate in making the Borough a place to build a life in peace and security and also take ownership for their own actions and those impacts on their neighbours including landlords and developers..

    Otherwise it is just a waste of money and time and will achieve little – that would be a shame.

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