CROYDON IN CRISIS: Announcements from Westminster and Whitehall today put the borough under the control of unelected bureaucrats who are answerable only to a Tory Government minister – in a scheme that the Mayor has helped plot for months. By STEVEN DOWNES
Jason Perry, Croydon’s first elected Mayor, is in office but he is not in power.
Just a week since Tory Perry bandied around dire legal threats of Commissioners being sent in – a central Government takeover of the running of the authority – if councillors did not pass his 15per Council Tax hike, today Michael Gove authorised the Government to take control out of the hands of Perry and the council’s chief executive, Katherine Kerswell, by announcing an “intervention” and assigning greater powers to its improvement and assurance panel.
The move clears the way for the Government possibly to agree to writing off hundreds of millions of pounds of loans, making Croydon the first council in the country to be allowed to default on its debt.
“It is understandable that Government wants to formalise our current improvement arrangements as a precautionary measure in light of the additional historic issues which have been uncovered,” pusillanimous Perry simpered in a brief post on the council’s website.
“Giving new powers of direction to Government officials is a clear sign Government is losing confidence in the leadership of the council,” Croydon Labour said in a statement on social media.
Others, less inclined to play party political Punch and Judy, suggested that if the Government, and the improvement panel, are losing confidence with anyone, then it is Kerswell and her team of “corporate directors” who are trying their patience, for failing to make rapid enough progress on the borough’s finances and, in particular, over the wretched state of the council’s housing.
Effectively, from today, Tony McArdle, the chair of the Whitehall-installed improvement panel for the past two years, will now be in charge of all significant decisions in Croydon – just as he was at Northamptonshire after that Tory-run county council’s finances collapsed in 2018.
Croydon’s special measures will last for at least two years.
“It’s the worst of all possible worlds,” one Katharine Street source told Inside Croydon. “It’s Commissioners, but it’s not…
“They will be sitting in the corner of the room at every meeting, determining what decisions the council can take, and what they cannot.”
A senior staffer in Fisher’s Folly reflected the frustration of many council employees. “The formalisation of the improvement agreement will effectively take away what little decision-making remains,” they said.
“So by default it will further hamper the ability of mere council workers to do their jobs effectively, if at all.
“As the 15per cent Council Tax rise shows, the likes of Mayor Perry and the senior directors are willing to do anything to keep hold of the meagre power they perceive themselves to posses.”
The Conservative Government’s intervention action in two other failed councils, Slough and Thurrock, was today ramped up. Katharine Street sources this afternoon suggested that the only reason that Kerswell, Croydon’s £192,000 per year chief exec, and her team of statutory officials, plus Perry, have not been removed en bloc, is as a face-saving favour for red-faced Perry, in return for his punitive Council Tax hike.
Last week’s Town Hall showdown earned Perry a dubious accolade today from a Conservative junior minister, who described him as being someone who is “prepared to ‘take firm decisions’,” which will undoubtedly appeal to the plastic guttering salesman’s ego.
Today’s announcements from Westminster and Whitehall were the Tory stitch-up that’s been at least six months in the making. Perry and his party colleagues have probably been working on this arrangement since before Jane West, the finance director, published Croydon’s third bankruptcy notice in two years last November. At the time, West made it clear that the only way to dig Croydon out of the deep hole of debt stretching back more than a decade would be for a massive write off of some of the council’s loans.
Michael Gove’s Department for Levelling Up helped to move towards that solution – Perry and Kerswell have requested a £540million debt write off – by suppressing the regular reports from their own improvement and assurance panel.
Today, DLUHC released two of those reports, one of which has been sitting in the Secretary of State’s in-tray for almost a year (indeed, the report was still waiting for Gove when he returned to the job after being sacked by Boris Johnson for his latest display of disloyalty last summer).
What was published today admits that Report 5, dated March 28 2022 and signed by McArdle and his colleagues Margaret Lee, Phil Brookes and Jon Wilson, was in many respects filling in – written after the limping Labour administration had passed its 2022-2023 budget (approved by McArdle and his panel), and before the local elections were held in May. Who can say whether Report 5, had it been published more promptly, might have swayed the way some Croydon residents voted last year? Perry was only elected Mayor by fewer than 600 votes.
The report barely addresses the £74.6million hole in the council coffers as a consequence of some creative accountancy over Croydon Affordable Homes beyond suggesting that it might be a bit of an issue, and the fact that the 2019-2020 council accounts had not been signed off by the auditors. Neither of these matters has yet been fixed.
“Once there is clarity on these two issues, it will be necessary to determine what changes if any are needed to the draft 2019-2020 accounts, and what the impact is to the draft 2020-2021 accounts and the opening balances for 2021/22,” Report 5 states quite calmly.
It also says that by January 2022, the council – then still Labour-controlled – was underspending its budget by £1.57million.
The next report, Report 6, also belatedly released today, is dated November 22, 2022 – the same day that West issued her Section 114 notice, predicting that she would be unable to balance the council’s budget in 2023-2024. Extraordinarily, the S114 notice goes unmentioned until three paragraphs from the end of the nine-page report (in journalism, this would be what is known as “burying your intro”).
In other respects, McArdle and his improvement panel appeared to be quietly satisfied that progress was being made. “In respect of its core responsibilities for the delivery of day-to-day services to residents in a manner which is both operationally competent and sustainably within budget, the council has for the most part continued to respond well,” the report says.
“Adults and Children’s Services, between them accounting for some 70per cent of the council’s net revenue expenditure, are making steady progress in improving the efficiency of their operations, and in reducing their costs.”
Elsewhere they note: “We have regularly referred to the pace of all of this change, which we would wish to have been faster, and have encouraged the council accordingly… ‘Two steps forward and one step back’ is prevalent in many authorities that are or have been in some form of intervention, and Croydon is no different in this regard.”
Their three main areas of concern included housing, property and finance.
Referring to the Regina Road scandal, the report says, “The council’s overall response to address these deficiencies has been too slow, with interim postholders occupying key positions for much of this time and not initiating many of the necessary changes.” This is believed to be a reference to Alison Knight, who Kerswell appointed on £800 per day, and who left the housing director role after six months without having any real impact at all.
It is in this report that the improvement panel provide a clue to the plan for a 15per cent Council Tax hike and half-billion debt write-off that would be slipped out a few months later.
They itemise nine areas which could be looked at to drag the council out of the crater of its interest repayments and negative equity, including an above-cap Council Tax increase, more borrowing, the reduction of interest charges on its Government borrowing and also, “Reforming local government funding to fully reflect demographic demand in Croydon.” Also referred to as “#Fund Croydon Fairly”.
Significantly, the panel members conclude, “The additional financial pressure on the council’s revenue budgets brought about by the increased costs of its structural debt, however, add a degree of challenge to future sustainability which place it beyond the council’s ability to meet.”
And that is what led to today’s letters, and statement to Parliament, from local government minister Lee Rowley. In his letter to McArdle, Rowley states that the Secretary of State “is minded to intervene” in Croydon because “the council is not meeting its Best Value Duty”.
Kerswell also got a stern letter, too, from senior civil servant Max Soule, ordering her and the council staff to facilitate the takeover by the improvement panel.
In his letter, Rowley added that the package of loans, debt write-offs and that Council Tax increase “is centred on the council continuing to make the necessary improvements to the satisfaction of the Improvement and Assurance Panel. The Panel will be backed by Directions issued to the council requiring them to follow the instructions of the Panel if they are not satisfied with the progress being made.”
Jason Perry may still, just, be in office, but he is not in power.
- Improvement panel Report 5
- Improvement panel Report 6
- Click here for the letter from Minister Lee Rowley to Tony McArdle
- Click here to read the letter from the Department for Levelling Up to Croydon CEO Katherine Kerswell
Read more: Council forced to issue 3rd bankruptcy notice in just two years
Read more: Two years too late, Tory Government intervenes over council
Read more: ‘Precautionary measure given the historic issues uncovered’
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