Thurrock, Warrington, Nottingham, Slough, Liverpool, Sandwell… Croydon is far from alone among basket-case boroughs. ANDREW FISHER traces the common cause back to Whitehall
Pay more, get much less: decisions made at the Town Hall will see Croydon operate a ‘minimal council’
Pay more, get less. That seems to have been the message from many councils across the country for a decade and more.
Now Croydon residents face paying much more to get much less from their council.
Conservative Mayor Jason Perry is believed to be asking the government for permission to raise our Council Tax by around 10per cent (well above average pay rises), while promising to reduce services and deliver only a “minimal council”. This would add around £200 per year to a Band D property in Croydon.
The situation in Croydon is financially, politically and logically unsustainable. But how did we get here?
It’s an old adage that while “success has many fathers, failure is an orphan”. In the case of Croydon though, the failure has a full cast of guilty parties.
Since 2010, then Chancellor George Osborne imposed massive austerity on councils across England, and London councils (disproportionately Labour) bore the brunt of that pain.
Year after year, funding for local councils was slashed, cumulatively chipping away at services, authorities’ reserves and pushing up Council Tax to compensate. Local taxpayers found themselves paying more to get less, as even Council Tax rises couldn’t compensate for the cuts in budgets.
Too little, too late: London Councils’ graph of CSP – core spending power – shows how the capital has been squeezed hard for a decade
Overall, the government has cut £15billion a year from local authority budgets, with Croydon faring worse than average.
Aware of the pressures councils were facing, the then Secretary of State for local government, Eric Pickles, encouraged councils to develop commercial strategies to generate more income. In 2014, Pickles encouraged councils to spend their reserves, saying they should be “making creative use of reserves to address short-term costs, such as restructuring, or invest to save for the longer-term”.
Architect of local disasters: ‘Big’ Eric Pickles
Councils like Croydon embraced such strategies and several, such as Tory-run Thurrock, have made terrible and debilitating losses – exacerbated by the “strong leader” model that allowed the political leaderships of borough and city councils to avoid scrutiny of their failings for far too long, as the Report in the Public Interest found of Tony Newman’s Labour administration here in Croydon.
One of Pickles’ first decisions in 2010 was to abolish the Audit Commission, with the intention “to radically scale back centrally imposed, bureaucratic and costly inspection and auditing, saving council taxpayers money”. It certainly reduced inspection and auditing.
But the failures of multiple councils in 2022 and 2023 requiring multi-million-pound government bailouts is causing a costly headache for Pickles’ successors.
Only in the last couple of years has the government started to discourage risky commercial investment strategies, belatedly banning councils from borrowing from the Public Works Loan Board for investing in commercial property – as Croydon did when buying the Croydon Park Hotel and the Colonnades leisure complex.
Even before Newman became leader of Croydon Council in 2014, he inherited a borough with around £1billion in debt – and a fantasy shopping centre scheme endorsed by a Tory MP and signed off by the previous Conservative administration.
‘Staring into an abyss’: former councillor Tim Pollard
In 2013, the then deputy leader of the Conservative-run administration, Tim Pollard, said, “We are staring into an abyss here, and it’s time we faced up to it.”
Pollard correctly forecasted: “There is a time coming, and it’s not far off, when the costs of dealing with an ageing and increasingly deprived population will mean that there is literally nothing left in many councils’ coffers for anything but social care.”
The Conservative government didn’t heed the concerns of either Conservative or Labour councillors and they continued with austerity – cutting grant funding to already underfunded Croydon.
The frankness of the outgoing Conservative administration 10 years ago rather exposes the current attacks on the previous administration by Mayor Perry and his finance lead Jason Cummings as empty partisan point-scoring. Croydon was holed below the waterline even before Newman got his hands on the tiller.
It remains an issue for Perry as it has been for Croydon’s political leaders for more than a decade that our borough has been systematically underfunded by central government relative to comparable and neighbouring boroughs. As long ago as 2012, this website reported a council paper highlighting that Croydon was short-changed by £95million a year.
Fantasy shopping centre: but Croydon Council was allowed to borrow £310m against imagined increased business rates from the Westfield that was never built
As a one-off, such underfunding is hard to manage. The cumulative effect over years has left this borough broken.
That deficit over 11 years amounts to more than £1billion – enough to more than halve the council’s debts, reduce interest payments and give the council significantly more funding. But the chances of reparations from current Secretary of State Michael Gove, although justified, are probably slim.
Remarkably, too, Croydon Council was allowed by the government to borrow against expected revenue from the Westfield development, even after many of us predicted it was never going to materialise. The council borrowed £310million against the prospect of increased business rates income, a prospect that always looked illusory to any sensible observer.
So George Osborne as Chancellor, Eric Pickles as Secretary of State for local government, and successive local administrations are the guilty parties in the joint enterprise of killing Croydon’s finances.
With people getting poorer this year and next and with Croydon having cut Council Tax Support to thousands of households, increasing Council Tax this year above the rate of wage increases would be deeply unpopular and unfair. Croydon has little in the way of reserves.
So the options are these: either Croydon citizens face another decade of paying more to get fewer services, or the government writes off the debt and gives Croydon the funding it needs.
The government-appointed panel overseeing Croydon has said the borough has “impossible levels of debt” and “just another capitalisation direction itself doesn’t do it”. So another government bailout, taking on more debt, isn’t the answer to solving Croydon’s debt crisis.
Much of the responsibility for Croydon’s failures are due to Whitehall funding decisions. It’s only fair that central government takes responsibility and writes off at least part of Croydon’s debts.
But that will not be enough until Croydon gets fair funding to meet the needs of our people, on a par with inner London boroughs.
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
From 2015 to 2019, Andrew Fisher 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:
- Fair day’s pay for a fair day’s work is not too much to ask
- No room at the inn? Home Office policies created migrant crisis
- Croydon surgeries where half GP consultations are by phone
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An insightful and erudite article. Surely the time has come, for full accountability and for the council ,its very well paid officers and the councillors to be held properly to account . If this was the private sector, any employee (at all levels ) would be sacked if they were found to be inept. There are clear examples of failings revealed in the numerous independent government reports .What efforts have been taken by the Leader and Mayor Jason Perry to chase the money and act ? The council and the Mayor needs to be held to account and inform all the residents (given the position) what steps have been taken and what money has been recovered and moreover whether the appropriate agencies are now involved . The Council, in many cases ie social care , homelessness , abuse ,has statutory duties to say the least of a moral duty to assist. The position of Croydon is disgraceful and unacceptable .
Pickles? Osborne?
Nuff said. Local Government used to do a lot without a huge amount of money. Nowadays it has even less, thanks to those two, and others, so it can’t do much at all
As for the local government workers, they are the Cinderallas of public service, without the public sympathy and high profile of nurses , firefighters and police, so their pay has been increased by very small amounts– like 1% – very mean amounts during the Osborne years.
Our expectation of what local councils can do has gone down, so if we see anything happening–like roads being propery re-surfaced- or even swept or gritted– it is like finding a nugget of gold in the River Wandle. A rare occasion.
Parks of anything more than “cut the grass” complexity– the ones with flower beds- have more or less fallen into dereliction.
Yet, we always expect the Council to come to help and remove fly tipping, and sort out messes .
We are meant to be the 8th or so richest country in the wporld, but it is very much a case of private wealth, public decline.
The trickle down myth has been exposed for being exactly that.
Andrew’s excellent article exposes the truth.Thank you.
Over to you, Mr Gove.
A bit of political spin going on here isn’t there?
Croydon may have been significantly holed before Newman and the Gang got their hands on the tiller, but it didn’t need them to make decisions to send the enterprise directly onto the rocks rather than let it slowly sink like most other local authorities.
If you read my contributions to this site you will see I am broadly sympathetic to the view that the underlying cause of most of Croydon’s problems has been due to it’s reaction to the actions taking at Westminster and the sheer incompetence in public finance philosophy pursued by these decision makers, but please don’t diminish the catastrophic errors made by the Newman administration.
It could have made a political choice to change direction with regard to Westfield development made by the previous administration, which simply looked reckless after the Brexit vote.
They could have made a brave and probably unpopular decision at the time to take stock and go into a holding position rather than instead make an even deeper commitment to it all and appoint as Chief Executive a person whose skillset was just based on property development than managing the needs of a London Council.
The project they called Brick by Brick and the sheer size of the incompetence practised here put Croydon on the rocks.
No amount of excuses regarding even the limited scrutiny by Croydon’s Tories and Whitehall can mask the sheer stupidity of it all.
I was at Purley Oaks station the other day and I can’t think of a more absurd development in all my life which is rotting in plain sight so close to the railway lines.
It has taken two parties to create this mess indeed, but please do not underestimate the sheer calamity of the post-2014 Newman Administration.
We pay tax and expect prudence and parsimony with good oversight and effective management of that tax to meet the Counrties needs.
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That has not been delivered either locally or centrally for quite a long time and before Pickles.
So causation is more basic.
That failure of regulations and oversight is not just Baron Pickles – that lies also with Cameron, May, Johnson,Truss and Sunak. All have had the opportunity to deal with this and have failed to do so invarying degree’s.
In the UK under successive Governments we have intense scrutiny of the population that borders on the kind seen in extremist governments, but none on the organs of state. Government appointed regulators faile to regulate or only belatedly bleat they never had the powers in the first place – (so why are they there and at great taxpayer cost?)
A headline today was – Magistrates allow over 500,000 warrents without oversight or due diligence and against regulation. It is not just Councils that are broke!
but let us be very clear – there is no money – the politicians pissed it up the wall!
Still the debt is unsustainable and cannot (and should not) be paid by the resident taxpayers who did not incur that debt.
If we are responsible for who we vote for then with respects the Government who failed to legislate and mitigate the risk and therefore exposed the public purse should take responsibility.
Yes the taxpayer should pay – but it should be all taxpayers in the UK not just those in poor/broke council areas that shoulder that burden created by a Central Government who failed to mitiate that in the first place.
There needs to be some honesty and clarityand not just in Croydon.
The conversation should be for all Councillors to ask the hard questions and look to have an Emergency meeting to agree a way forward found that is acceptable to all residents, the Advisory Board should be there also and participate.
Thank you for this article. It’s good to remember what actually caused Croydon to be in the situation it currently finds itself. The Council was forced into a difficult situation by the Cameron govt’s failed economic policy driven by the dogma of fiscal conservatism. The Council tried to be financially creative to fill the funding gaps but failed miserably; unsurprising given that most staff don’t have a commercial background. The fact nevertheless remains that it should never have found itself in such a situation in the first place.