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Gove’s ministerial statement on state of Croydon finances

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At lunchtime today, Michael Gove, the Secretary of State for Levelling Up, Communities and Housing, dropped a written statement to the House of Commons – just before the start of the summer recess – on the progress, or otherwise, made in the last two years since the Government’s intervention over Croydon’s financial collapse.

Here is that statement in full:

Update on the Intervention in the London Borough of Croydon

On 16 March 2023, the Minister for Local Government updated the House on the work of Commissioners and Improvement Panels at three councils, including the London Borough of Croydon. Whilst acknowledging the significant steps that had already been taken by the Council over recent months, given the depth of the historical challenges and the extent of improvement required, that we were minded to move the existing Improvement and Assurance Panel, chaired by Tony McArdle OBE, to a statutory footing.

This proposal followed the evidence provided in the Improvement and Assurance Panel’s latest assessment that the Council under the leadership of Mayor Perry has made good progress in laying the foundations for its recovery. At the same time, historic issues continue to be unearthed at Croydon and their potential impact on the Council and the progress made to date cannot be underestimated, particularly given its continuing precarious financial position.

I concluded that the Authority was not meeting its Best Value Duty – a requirement set out in the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

The intervention package proposed in March centred on the Council continuing to make the necessary improvements to the satisfaction of the Improvement and Assurance Panel, as they have done to date. The Panel would be backed by statutory Directions issued to the Council requiring them to follow the instructions of the Panel if they were not satisfied in the future with the progress being made.

I invited representations on our proposals from the Council, and from members of the public, which I have now received and considered.

Council chief executive: Katherine Kerswell

We received one representation from the Chief Executive of the Council. The Council supported the intervention and the proposal to move the existing Improvement and Assurance Panel to a statutory footing, although requested some changes to the proposed intervention package to remove risk management and commercial governance as individual priority areas, citing notable progress in these areas.

The representation also identified finance, housing and transformation as three pressing priorities which the Council needs to address and which should be specifically covered by the proposed intervention package. They recognise the importance of the Council continuing to lead their recovery and are committed to continue working positively with the Panel moving forward.

Having carefully considered the representations received about the intervention, I am today confirming that the Panel will now be placed on a statutory footing.

Best Value Intervention in the London Borough of Croydon

On balance, it is not necessary to identify risk management and commercial governance as individual priority areas at this stage and have amended the intervention package accordingly. We expect the Panel to continue to monitor the effectiveness of the Council’s management arrangements.

The intervention package should focus on the three individual priority areas of finance, housing and transformation and have amended the package to reflect this. On this basis, we have decided to make two new appointments to the Improvement and Assurance Panel. Margaret Lee, Finance Lead, wrote to me on 12 March to tender her resignation for personal reasons. I accepted Ms Lee’s resignation with immediate effect and I would like to thank her for her excellent work in Croydon and wish her well for the future. Along with appointment of a new Finance Lead, we are also appointing a new Panel member to lead on Housing.

Finance chief: Brian Roberts now has the final say over Croydon’s finances

Brian Roberts OBE (Finance Lead) – Brian provided financial support to the commissioner team in Liverpool and was Finance Commissioner at Northamptonshire County Council. Brian is currently Chair of the CIPFA Financial Management and Governance Panel.

Pamela Leonce (Housing Lead) – Pamela is the CEO Founder at Stowhill Careers and has been an Executive Director with experience across the housing, health, social care and criminal justice sector.

This brings the Panel membership to five, with Tony McArdle continuing to chair the Panel and Jon Wilson and Phil Brookes continuing in their respective roles as leads in Adult Social Care, and Commercial and Asset Disposal. I would like to take this opportunity to thank Tony, Jon and Phil for their ongoing work in driving forward the necessary improvements at Croydon and for agreeing to continue leading the Croydon Improvement and Assurance Panel. We will appoint a new Panel member for transformation in due course.

The statutory Panel has been appointed until 20 July 2025, or until such earlier or later time as we determine. We are clear that the Directions should operate for as long, and only as long, and only in the form, as necessary.

The Panel will be asked to provide their next report within the next three months, with their initial views and an assessment of whether they require further support. I will review Panel membership at this point to ensure that the Panel continues to be fit for purpose for the Council. Future reports will be provided every six months, or as agreed with the Panel.

I want to be clear that the Council will continue to lead their recovery but that the intervention package and appointment of the two new Panel members will ensure momentum is both maintained and increased with the support and expertise of the Panel. That is to say that decisions will continue to be made by the Council; the intention being that the Panel will only use their powers of instruction as a last resort if they are dissatisfied with the Council’s improvement processes.

As with other interventions led by my department, the Council will be directed to meet the costs of the Improvement and Assurance Panel. The fees paid to individuals are published in appointment letters which are available separately on gov.uk. I am assured this provides value for money given the expertise that is being brought, and the scale of the challenge in councils requiring statutory intervention.

Conclusion

The Government will continue to work closely with the political, business and cultural leadership of Croydon, to ensure the return of the Council to sustainability for the long-term. We wish to place on record again our thanks for the progress made to date and look forward to further advancement in the months ahead.

I have published the Directions and Explanatory Memorandum associated with this announcement on gov.uk and will deposit copies in the library of the House.

Read more: Government panel given extra powers and new commissioners


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