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Croydon is in a right Pickles and it is easy to work out why

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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

Some of Andrew Fisher’s recent columns:


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