If council budget fails to pass, expect a long night on Mar 8

CROYDON IN CRISIS: Former senior councillor JERRY FITZPATRICK looks ahead to tomorrow night’s key budget meeting, and previews what could be in store in the Town Hall meeting under an executive Mayor and with the balance of power between the political parties delicately balanced

Fun factory: the borough’s 70 councillors could be in for a long stay at the Town Hall over the budget

It used to be so easy.

The council cabinet would agree a budget to put before the full council. The majority group on the council would then provide the votes to pass the budget while the minority group would either make meaningful amendments, or showboat, or boo and hiss, or sit sullenly on their hands – whichever they deemed fit.

Showboating combined with booing and hissing was the favourite opposition option.

No longer.

Under our gleaming new elected Mayor system, the budget proposal is the Mayor’s alone.

Mayor Jason Perry’s 15per cent Council Tax rise was “noted” by his cabinet in their meeting on February 22. From that point, an opposition party could have drawn up an alternative proposal, calling on support from a senior council financial official.

Such an alternative would have to be a balanced budget. So, any proposal to increase Council Tax by a figure less than 15per cent would require cutting spending or incurring and capitalising new borrowing if the council was able to do so. If any party has travelled down that unappealing road, they haven’t yet said so.

That budget now goes before council tomorrow night, March 1.

There, the council may either agree the proposals or object to it and require the Mayor to reconsider. Given that the Conservative party has a minority of councillors (33, plus the Mayor, against 37 combined Labour, Green and LibDem), it seems certain that the Mayor will be asked to reconsider.

Budget-buster: Mayor Jason Perry is solely responsible for the financial measures being proposed

The Mayor must reconsider his budget in the light of the council objection. He must give his response to the chief executive, who then will reconvene full council within seven working days. A meeting has already been scheduled for March 8.

At this second meeting, the council has two available choices: it can approve the Mayor’s original or revised proposal, or it can set an amended budget provided that such budget is passed by a majority of at least two-thirds.

Even if opposition parties worked in unison and with the desire or ability to set an amended balanced budget, they would need the support of probably as many as 14 Tory members to achieve it. In other words, it will not happen.

But the council is free to vote down the Mayor’s original or amended budget. That’s a real possibility given that the opposition parties – Labour, Green and Liberal Democrat – have enough votes to prevent its passage.

Then a default option comes into play. The council’s chief financial officer, Jane West, is required by the council constitution to identify “the minimum decisions and resolutions the council must make… as required to comply with statutory requirements”.

I can only do my best to interpret what this rather opaque piece of legalese actually means. Bear in mind that the council must submit a balanced budget to central government by March 11. The council at the start of the new financial year on April 6 must be able to undertake its minimum statutory responsibilities and pay its bills. So, at the very least, it seems the chief financial officer must identify as a holding position a Council Tax rate which enables it to meet such a minimum.

Naughty schoolkids: CFO Jane West could keep the councillors behind

At this point, the fun starts.

The chief financial officer can either state that a decision to set a budget must be made at the meeting in session, or full council can be reconvened for a third session, with the possibility of new budget proposals being put to this third meeting.

However, if the chief financial officer stipulates that a decision is required at the second meeting, councillors will be kept in, like a class of naughty schoolkids, until a budget is passed. Our poor dear council representatives could be there for days, fed and watered by compassionate residents with supplies deposited at the Town Hall entrance.

Are council members ready to perish in the great cause?

Or will opposition members sit on their hands at the second meeting and let the budget through?

Your guess is as good – and probably the same – as mine.

Just a reminder that the government does have the power to send in commissioners to take over the running of the council. Their starting point would no doubt be to agree the budget which is set out in the chief financial officer’s report, including the 15per cent Council Tax increase.

And then there is the matter of the Section 114 notice issued in November. That predicted that Mayor Perry and West would not be able to deliver a balanced budget for the 2023-2024 financial year.

I am certainly not suggesting that the issuing of the S114 might only be interpreted as a tactical manoeuvre to get more money into Croydon’s base budget. But if it had been, it would have been very shrewd and has had its desired effect!

It is worth bearing in mind that increasing Council Tax raises income on a recurring and compounded basis – so any 15per cent increase this year will be included, and potentially added to, in future years. Whereas the cancellation or discharge of debt only provides net income. If the council achieves both it will be a huge double boost to setting sustainable budgets. If the council can do only one, it may still mean that the putative S114 is rendered unnecessary.

It is highly likely that Jane West is an enthusiast for the budget being placed before the council. Experienced financial officers know that their political bosses will want (if they have a scintilla of sense) to front-load the pain in the electoral cycle while maximising the budget base.

In short, provided that the budget is passed, there may not be the need for the S114, especially given that some of the assumptions about cost pressures are speculative.

And if £38million is wiped off annual lending repayments because the government agrees debt write-offs, I forecast that the S114 will certainly be withdrawn.

  • Jerry Fitzpatrick, pictured right, is a retired barrister who most recently was a councillor for Addiscombe West ward from 2018 to 2022

Read more: 15% tax hike sends council hurtling into constitutional crisis
Read more: Government to write off £540m of council’s debts, as Croydon becomes the Northern Rock of England’s local authorities
Read more: Council forced to issue 3rd bankruptcy notice in just two years

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 Council Tax, Croydon Council, Jane West, Jerry Fitzpatrick, Katherine Kerswell, Mayor Jason Perry, Section 114 notice and tagged , , , , , , , , , , , , . Bookmark the permalink.

11 Responses to If council budget fails to pass, expect a long night on Mar 8

  1. Jerry Fitzpatrick is unbiased, careful and meticulous.

    It is a shame he is no longer a councillor. We could do with people like him as our councillors.

    I hope he will stand when our current limp, uncommitted, charisma-free, politically trammelled, servile and self-deluded lumpen politician comes to the end of his term.

    Fitzpatrick may not be in the first flush of youth but, by golly, the clarity of his thinking beats anyone in the local field.

  2. Sally Field says:

    If anything above a 5% increase in council tax is agreed Perry is finished as a politician in Croydon

    Imagine a family with children having to find up to £450 extra per year to find the salary of Heather Cheesbrough who is not only massively overpaid for the limited contribution she makes, she also openly sneers at those funding her salary.

    The people of Croydon must also wake up to the vacuous Katherine Kerswell who is only interested in her own well-being. I find people who take pleasure in redundancy the lowest of the low. Kerswell should go – Croydon deserves much better.

  3. Ian Kierans says:

    Jerry is sorely missed but thankfully he still shares his thoughts.

    So no matter which way this vote and protest turns out, Residents will end up paying the unfair debt.
    That may be the end result but the path to that result is morally right.

    I would ask politely that IC records every vote for and against this insidious wrongful increase – including those that do not turn up to the most important vote of their local political lives. This way the Electorate will know exactly who not to vote for at the next election.

  4. I know that residents will be concerned that Labour now has a substantive role in setting the council’s budget, just after the release of the Penn Report with its revelations of previous corrupted governance.

    Nevertheless, Labour will now need to come up with concrete proposals on what budget adjustments they want from the Mayor and his Cabinet in terms of changes that deliver a lower tax increase and that care for Croydon residents.

    There are many sensible Croydon based policy options to hand.

    • Andrew, they’ll just continue to do what they’ve been doing, which is shrug off responsibility.

      Croydon Labour’s website and propaganda leaflets say “councillors of all parties, including the current mayor, should never have voted for irresponsible budgets”. That is the nearest they will get to admitting their role in this debacle.

      The discredited leadership members who created and forced through those “irresponsible” budgets, along with equally bad plans, policies, contracts and decisions, Butler and Scott, remain party members, as do Newman and Hall, despite the fig leaf of suspension. And let’s not forget those involved in handling stolen data who still hold positions of power.

      If Croydon Labour were serious about being “under new Leadership at the Town Hall”, they would remove the gang of four and the others with as much haste and fairness as they did when they kicked out you and David White.

  5. Anthony Miller says:

    One suspects this 15% is a negotiating position so when it ends up at only 8% the Croydon Poll Tax will “”not seem that bad”

    • geoffjames2 says:

      Anthony, not sure that is logical. The write-off of around £1/2Bn in debt appears to be contingent on a 15% council tax increase.
      The opposition might protest and try to court voters by resisting the 15% increase, but their options are very limited. Let’s assume the interest on £1/2Bn is £20M per year (ie 4pa).
      (1) If the opposition chose to forgo the £1/2bn in debt forgiveness then they will need to provide a budget that can fund the £20m in interest that is attached to the debt. So £20m of extra savings or extra revenue is needed for 2023/24 – and these savings/revenues need to roll over to 2024/25 etc or the “can” is simply kicked down the road. This alternative budget will likely have no choice except to apply a very large council tax increase to cover the £20m interest bill on an ongoing basis. So we are all better off swallowing our medicine now – accept the 15% council tax rise and the debt forgiveness.
      (2) If the opposition can’t find a viable alternative budget and still block the budget then they risk the nuclear option. The council could be forced into emergency measures where only mandated services are funded and literally nothing more. This would be a scorched earth policy. The vulnerable residents of Croydon will suffer the most and we are likely to pay even higher council taxes to dig our way out of the new/deeper mess they will have been created.
      Whilst no one likes the 15% council tax increase – it is the only realistic option on the table.

      • It really is not, Geoff.

        You perhaps need to check your figures a bit more carefully.

        The 15% Council Tax hike would raise an extra £22million per year (according to Mayor Perry).

        Reneging on the borough’s debts – or £540m of it – would reduce debt repayments by £38m (according to the same source).

        Meanwhile, the very same Mayor is asking for more loans – £224m in another capitalisation direction. More debt. Just restructured a little.

        Add £22m on to that latest bail-out, and there’s your solution.

        The government created this situation – in Croydon, Thurrock, Slough, Nottingham, Woking… It is now for the government to resolve it, by writing off debts, not by punishing residents, as you and Mayor Perry seem all too eager to do.

        • geoffjames2 says:

          Not to fear labouring the point – but you are over simplifying
          Borrowing ever more is not the answer. The 15% increase generates £22m this year and thereafter year after year. Simply borrowing another £22m this year means the interest is even higher next year and you need to borrow more.
          There is no magic answer to anyone or any entity that is in a debt-crises. They either endure the pain or offload the debt to somebody else.
          Blaming Jason Perry, or pretending he is unelectable because of the 15% increase is ignorant of the facts. I am convinced that whoever is in power in Croydon would be required to lift our council tax by some significant percentage.
          As the Penn report stated for far too many years the administrators in Croydon avoided making the difficult decisions.

          • First you get your facts wrong, now you misquote the Penn Report and you try to gaslight the rest of the borough.

            If Perry and his pals in Whitehall can write-off £540m of debt, then they might as well write off £562m. Or whatever it takes.

            But it really is no argument for raising Council Tax in a clearly punitive measure to say that the increase is necessary to avoid unsustainable borrowing when, at the same time, you are borrowing another £224m.

            This isn’t a “difficult decision” by Perry and the Tories. This is a nasty decision.

            But interesting to hear that you support it. There’s always one.

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