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Kerswell still holds out over Penn Report’s recommendations

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CROYDON IN CRISIS: ‘Those with the biggest responsibilities and with statutory duties let the organisation down’ according to the investigation into the council’s financial collapse. The two-year delay in publication appears to have let down the borough’s residents and council staff yet again.
By STEVEN DOWNES

A long time coming: Croydon’s over-cautious council finally released a version of the Penn Report today

In the end, the two-year delay in publishing the Penn Report was all to allow those who were in charge when the borough went bankrupt to make a single factual alteration, and to introduce just eight redactions – deletions in thick marker pen – to the 143-page report.

The Penn Report was commissioned in late 2020 through the Local Government Association, after first auditors Grant Thornton issued Croydon with a highly critical Report in the Public Interest and then the council declared itself effectively bankrupt.

At the time, it was hoped that the report might help bring to book some of those responsible. But with every passing week that it went unpublished, and Labour and Conservative-led administrations were refused permission for a full council debate on its recommendations, the chances of that happening have become ever more remote.

The investigation conducted by the LGA’s Richard Penn examined the actions of Croydon’s senior managers and councillors. Penn’s recommendations have been gathering dust in the office of Katherine Kerswell, the council’s current chief executive, since February 2021. When Kerswell was parachuted into crisis-hit Croydon in September 2020 to take on the £192,000 per year top job, it was with the endorsement and recommendation of the LGA.

Penn interviewed 64 individuals connected to the council as part of his investigations. Among his recommendations, he said that officials should look into whether former chief executive Jo Negrini’s controversial £437,000 golden handshake can be recovered – something which, Inside Croydon readers will know, has long been superseded since by written advice from a senior barrister.

Code-breaker: former council leader Tony Newman

As Inside Croydon reported exclusively last October, Penn also recommended that some of the council’s most senior staff (all now former executives) – Jacqueline Harris-Baker, who was the council’s most senior lawyer, Shifa Mustafa, who was in charge of development and planning, and Lisa Taylor, the finance director – should all be reported to their relevant professional bodies.

It also recommends that Tony Newman, the former Labour leader of the council, and Simon Hall, the cabinet member for finance from 2014 to 2020, need to be reported for possible breaches of the councillors’ code of conduct. It’s two years since either of them were councillors, and therefore two years since either were still subject to that code of conduct.

Way back in February 2021, Penn also recommended that his findings be referred to the Metropolitan Police “for assessment of any further action being warranted in regard to the handling of public money and conduct in public office”.

Yet despite having sat on the Penn Report for two years, Kerswell has announced that she is not going to follow through on any of Penn’s recommendations. Well, not until she had drafted another council paper and held another meeting.

Kerswell has used an on-going employment tribunal case with another former executive as the excuse for non-publication.

Delaying tactics: Katherine Kerswell

“The council has always been committed to publishing the report, if at all possible, but it has taken longer than we initially thought to reach this moment,” Kerswell announced in an internal memo to what remains of the council’s staff.

The employment tribunal ended last September, six months ago.

“In the five months since then,” according to Kerswell, “the Maxwellisation process for publication has been underway and significant work has been undertaken to ensure all comments received from the interested parties have been considered in detail.”

Maxwellisation is where those criticised in the formal report get shown the document and are given an opportunity to comment or dispute its findings. Sources at the council close to the process suggest that under ultra-cautious Kerswell, those mentioned in the report have been indulged in this manner at least twice, in some instances perhaps three times.

All the craven council’s Maxwellisation to-ing and fro-ing and other delays eventually resulted in just eight short redactions and one factual correction.

“Whilst the time since September 2022 and indeed February 2021 has taken longer than any of us has wanted,” Kerswell told staff, “I know you will appreciate the requirements for full and proper processes to be undertaken must be met.

Mentioned in despatches: always good to be described as a vacuum filler, one extract from the Penn Report

“Professional skill and care have been applied over many months to this process and external legal advice taken.” None of which adequately explains, or excuses, the inordinate and deliberate delays in publication.

And in her by-now familiar, patronising tone, Kerswell continued: “The report isn’t an easy read, and some of you who worked in Croydon at the time may feel memories are triggered of how hurt and frustrated you were by the actions of others who were given great responsibility…

“We are doing all that we can to turn things around for you, for the council and for residents – to rebuild trust and make sure we restore the good governance and oversight needed to stop these issues happening again,” said the council official who has still not implemented the recommendations of a report she has had for more than two years.

The version of the report leaked to Inside Croydon last autumn was slightly different to that which finally emerged today. Ours was dated February 2021. The version released by the council is dated March 2021 – after Penn had submitted his original draft to Kerswell. So maybe the “independent” investigation wasn’t quite as independent as we are meant to think?

Corrosive top-down culture: Jo Negrini is much-criticised in the Penn Report

This council version does include a few additional paragraphs and redrafting, but nothing significant. The list of interviewees has been withheld, to maintain the anonymity of those who gave evidence. The final chapter, “Conclusions and Recommendations”, remains seemingly unaltered.

Here, Penn lists three areas of particular concern: management misjudgements and actions which led to an absence of adequate budgetary controls; systemic management failures of internal corporate controls; and the “failure to stop a corrosive top-down culture” of controlling and bullying behaviour by former senior councillors and, identifying her specifically, Negrini.

Penn summarises his findings by writing, “By narrowing its focus and attention to a small number of commercial, regeneration and other goals the council appears to have effectively ‘blinkered’ itself to its wider responsibilities.

“And by seeming to encourage overly positive news while appearing to avoid unwelcome and inconvenient feedback, including feedback that was grounded in the reality of service outcomes and staff experience, it appears that the council’s political and managerial leadership failed to focus on the real budgetary crisis that was enveloping them.

“‘Collective corporate blindness’ was the term used by the council’s external auditors, and the majority of people that I interviewed agreed with that description.

Describing Croydon as a dysfunctional organisation, Penn wrote, “It would appear that those with the biggest responsibilities and with statutory duties let the organisation down.”

Read more: Negrini’s £437,000 pay-off: who is going to pay it back?
Read more: Newman breaks his silence to tell Mail: I did no wrong
Read more: The ins and outs of quietly getting rid of a council CEO
Read more: CEO Negrini’s long campaign to shut down Inside Croydon


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