15% tax hike sends council hurtling into constitutional crisis

ANDREW PELLING on how Mayor Perry faces a humiliating defeat over his controversial first budget because of some less-than-clear legislation, while the borough’s councillors could be in for some very long nights in the Town Hall Chamber

Cash-strapped Croydon Council is on the brink of a constitutional crisis, with Jason Perry, the borough’s new Conservative Mayor, facing the prospect of defeat at Wednesday’s crucial budget-setting meeting.

So far, more than 25,000 people have signed a petition opposing Mayor Perry’s punitive 15per cent Council Tax hike, and many of those are expected to attend a rally outside the Town Hall before the meeting.

And the protestors might consider that their efforts have been worthwhile if, as is expected, a majority of councillors later vote against the Mayor’s first budget and the “Perry Premium” Council Tax increase.

The common understanding in local government is that directly-elected Mayors can get their key policies, such as the budget, passed unless two-thirds of a council amends or rejects them. In Croydon, with its 70 elected councillors plus the Mayor, a two-thirds majority would require 48 members of the council to vote down the budget.

Weak constitution: Mayor Jason Perry won’t be able to pass his budget at this week’s Town Hall meeting

But today, almost a year since electing its first executive Mayor, the council still does not have an agreed constitution that reflects this new way of working. Only a modest part on council procedure has been done.

And there are some officials within the council who have come to the view that the Mayor’s power to ignore a simple, one-vote majority does not exist.

The Local Government (Standing Orders) (England) Regulations 2001 Schedule 2 is the key document that arbitrates on these powers

Clauses 8 to 14 and Clause 1 of this Schedule, with its related definitions in Part II of the Local Government Act 2000(1), are of the keenest relevance in regard to the budget process.

And these clauses can be open to different interpretations.

My own is that the Schedule could be given a reading that allows the Mayor to push on with the cabinet’s budget if it’s not blocked, rejected or amended by a two-thirds vote. This is the common, precedent-supported practice.

I do have a caveat, however. Mayor Perry’s budget was not published by the required deadline of February 8, so as to make the Schedule apply. However, this will be moot, bearing in mind the now expected constitutional crisis the ccouncil has embarked upon.

The council has its own interpretation of the legislation.

Late-night line-ups: the borough’s councillors could be in for some very long sessions in the Chamber

This alternative reading of the Schedule says that the Mayor does have to get a majority for the budget, not just one-third of those in council chamber plus one vote. The two-thirds rule will be applied only as a hurdle to be jumped for amendments to the budget.

This is important in Croydon, where Perry’s Conservatives failed to win a majority on the council, despite Labour haemorrhaging seven council seats in the local election last May.

Only the Mayor and his cabinet can propose a budget. Other councillors have discretion only to amend and secure an alternative budget by a two-thirds’ vote. These points are not disputed.

The Schedule allows for a second meeting for the Mayor and his cabinet to consider and respond to any proposed amendments and the case made for those amendments. At the full council meeting held on February 1, Alisa Flemming, the borough’s ceremonial Mayor who chairs these meetings, announced that provision was being made for a second budget meeting on March 8. Effectively, Mayor Perry is anticipating having his budget rejected this Wednesday.

A consensus is growing between the two larger political parties on the council that requiring a two-thirds majority for budget rejection cannot be applied.

The council sought advice. Apparently, the Local Government Association originally said that the two-thirds rule did apply. But they then came back later to say that, as written, the Schedule was not “robust enough”.

A senior source at the council says that the matter has been well-trailed with Whitehall, even involving the person who drafted the secondary legislation. It has been agreed by civil servants that the law needs revision for the sake of clarity and to support the intention of having a two-thirds rule.

Officially, after Perry won the Mayoral election by fewer than 600 votes last May, Croydon is “no overall control”. The number of votes on the council by party is as follows:

Conservatives: 33 councillors plus the Mayor = 34 votes
Labour: 34 votes
Greens: 2 votes
Liberal Democrat: 1 vote

The Mayor does not command a majority in the council chamber. Labour, though, do have a high absentee rate. So if more than three councillors fail to show up or go AWOL this Wednesday, for whatever reason, the Mayor would get a bye and residents will receive their 15per cent punishment in their Council Tax bills later in March.

Mayor Perry’s Conservatives lost three votes at the February 1 council meeting. This was only achieved with the aid of the supposedly neutral ceremonial Mayor Flemming, a Labour councillor. Sources close to Flemming say that she resents being drawn into the party political fray when Labour members fail to show up or just wander off home early.

Labour’s Town Hall leader Stuart King says that those Labour councillors who do turn up on Wednesday night will vote against the budget.

Civic duty: ceremonial Mayor Alisa Flemming could have a role to play

The Greens and LibDem councillors have all expressed opposition to the 15per cent Council Tax increase.

If a budget is not passed in time for the imminent new financial year, Michael Gove, the Secretary of State at the Department for Levelling Up, can intervene under Section 15 of the Local Government Act 1999. Government commissioners, kept at bay since Croydon first admitted it had gone effectively bankrupt in November 2020, would be knocking at the Town Hall door to take over.

More likely than government intervention, however, will be Labour, Green or LibDem councillors eventually having to participate in the decisions to deliver a balanced budget.

Key elements of the Croydon Tories’ financial plans for the next couple of years include requesting £224million in even more government loans, and an unprecedented debt write-off of £540million, just to bring the council’s annual loan repayments down by £38million per year.

Jason Cummings, Perry’s cabinet member for finance, said on Wednesday that there could be a long delay in the debt write-off as the government considers the “moral hazard” – the unwelcome precedent being set for troubled councils all across the country. Cummings also said that the solution eventually secured for Croydon Council may look different from debt forgiveness.

‘Moral hazard’: cabinet member for finance Jason Cummings

“The budget is the best of a bad set of choices,” Cummings said, but if councillors have other proposals for sorting the council’s budget, they will need a two-thirds majority to pass those ideas into practice.

The council constitution guides members that if they fail to pass a budget at the second meeting, council officials will take over at that second meeting on March 8, with Jane West, the council’s chief finance officer, in charge.

Councillors will be forced to keep the second meeting going until they comply with what the constitution calls “the Proposal”.

The Croydon interpretation of The Local Government (Standing Orders) (England) Regulations 2001 Schedule 2 is a serious blow to Mayor Perry, as he sees power, but not executive responsibility, being given to councillors.

The change in the balance of power has other implications, too.

The Croydon Plan, Croydon’s planning policy with all the debates around what is “appropriate” intensification, is up for review this year. The Mayor may get blocked from executing his lower intensification (less new homes) policy that was a vital plank of his election campaign.

So until or unless this constitutional crisis is resolved, the Mayoralty will be much weakened, and the political parties are likely to put as much effort into winning council seats in future as in winning the “top” job.

Read more:Government to write off £540m of council’s debts, as Croydon becomes the Northern Rock of England’s local authorities
Read more:
Perry to preside over record-breaking 15% Council Tax hike
Read more: Public’s furious reaction to Perry’s Premium Council Tax hike
Read more: Mayor Perry: ‘It’s going to get worse before it gets better’

  • Until May 2022, Andrew Pelling (pictured right) was a councillor for Waddon ward. Pelling has been elected as a Conservative MP and London Assembly Member for Croydon and served on the council for 32 years, including eight as a Labour councillor

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
This entry was posted in Alisa Flemming, Andrew Pelling, Council Tax, Croydon Council, Jane West, Jason Cummings, Mayor Jason Perry, Stuart King and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

4 Responses to 15% tax hike sends council hurtling into constitutional crisis

  1. Great report, Andrew. Democracy’s a bitch, eh? Jason Perry might be in office but it looks very much as if he’s not in power; a Mayor in name only

  2. Sarah Bird says:

    An erudite report.

  3. Ian Kierans says:

    A fine analysis of Local Government regulations and rules.

    I use a more simplistic round up of the situation

    Central Government delgates power to local authorities to deliver local needs.
    Central Government gives Central funding to pay for those local needs.
    Central Government regulates Local authorities to ensure that dosh is not mis-used.
    Central Government sends in Government officers to rectify when it is mis-used.
    Central Government supports local Democracy by allowing local resident to vote on local matters by election and referendum.

    Hmmm perhaps a bit simplistic but considering we are being treated like Mushrooms by Gove, Perry and Kerswell
    Its more like

    Central Government delgates power to local authorities to deliver local needs.

    Then the lunatic’s took over the asylum.

    Now Central Government got sectioned to bedlam and the Mayor realised he got the booby prize and is left holding the shit he helped create!

    But Andrew has so much more finesse in communication

  4. derekthrower says:

    The whole problem with this analysis is that Central Government is at much part of the problem as Local Government as it had abrogated responsibility in the first place.

    At the start of the Austerity Regime and if anyone can remember the Tory buzz word from that time, “Localism”, gave Councils more flexible rights to huge amounts of Public Loan Works board debt to compensate for their punitive reductions in grant funding.

    Investment was no longer restricted to direct investment. Before this current Regime the Treasury carefully regulated such debt to make sure it was for new capital investment and had to strictly adhere to some definition of what everyone thought councils used to invest in such as new facilities to provide local services and not into financial engineering.

    Mr Kierans seems to be unaware of the current context and the problems this does provide for the Central Regime as they have never bothered to conduct any coherent oversight of what debt was being used for and clearly the Council did not have any explicitly imposed constraints on it’s actions from the Centre. This is the basis for the complete failure in public finance that is now afflicting so many Local Authorities and even those who did not chase rainbows due to the draconian cuts in grant funding.

    Further Pelling outlines the dog’s breakfast of advice regarding legitimacy that the Blair Regime clearly had not thought through with its Mayor innovations and could occur in a financial/political crisis. Such precedents normally have to be found in legal rulings or explicit advice/ legislation from the Centre. There seems to be a vacuum of leadership and advice from the Centre on this matter.

    Gove has always been put forward as a problem solver of such conundrums. His solutions to the cladding crisis and leasehold reform show he is good at providing fine words, but incapable of providing the strong leadership required for remedies that will upset powerful supporting vested interests that underwrite the Conservative Party.

    This time he is faced with opening a Pandora’s box of debt write-offs if he follows the simple solution being requested by Part-time Perry and Cummings via the old boys network.

    As with so much of Conservative Party problem solving my guess is a number of sticking plasters will be delivered to keep the can being kicked down the road until the fundamental problems can be dealt with by a new Central Regime which does not have to comply with the dogmas of this failed Government. Any real solution will be messy and no doubt Conservatives everywhere will be blaming those for having to solve the problems they left behind.

    A level of uncertainty and instability has been created that makes many fear about what is going to happen over the next couple of years.

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