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

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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


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