We are witnessing the long, slow death of local government

‘We are staring into an abyss here, and it’s time we faced up to it’. Those were the words of a Conservative councillor in Croydon – in 2013.
Here, ANDREW FISHER, pictured right, says that faced with austerity on a brutal scale, it is time for local councillors from all political parties to force central government to fund them all fairly

The crisis of Croydon Council’s finances has only deepened in recent months. Jason Perry is Croydon’s “Executive Mayor” in name only.

Mounting problems: Michael Gove

The council has effectively been taken under direct control by Whitehall, with Government-appointed commissioners running the show – Croydon’s improvement panel now “directs” rather than “guides”, according to Leveling Up Secretary Michael Gove.

If Mayor Perry had any dignity, he would refuse his £82,000 council salary. He has been relegated to a ceremonial position. Croydon effectively now has two ceremonial mayors.

Conservative Mayor Perry was elected as Croydon’s first directly elected mayor in May 2022 pledging to “fix the finances”. It was a promise he knew he could not keep.

Instead, Perry’s been shunted aside by his own party in government. It should be a blessed relief. The finances are not, and never were, fixable without central government intervention.

But the problems facing Croydon Council aren’t going to be solved by Mayor Perry staying or going – though residents on the receiving end of Perry’s 15per cent Council Tax hike might disagree.

Perry’s failings are relatively minor in the grand scheme of the disastrous situation in which we find ourselves. The reality is that Croydon is just one of dozens of councils across England that have been pushed to the brink over the past decade.

Mayor Perry went to the Department of Levelling Up, Housing and Communities with a special request, asking to be allowed to hike Council Tax by 15per cent. In return, he and Croydon’s chief executive, Katherine Kerswell, begged for a half-a-billion-pound debt write-off. They were rebuffed, and instead Gove gave his commissioners greater powers.

‘Thurrock on steroids’: Woking is the latest debt-laden council to go bust

In 2018, Conservative-run Northamptonshire County Council became the first council this century to issue a Section 114 notice, an admission that the council could not balance its books. It was broken up soon after.

Since November 2020 when Croydon issued the first of its three S114 notices, five other councils have done so as well: Thurrock, Northumberland, Nottingham, Slough and, most recently, Woking.

Many other councils are reporting that they are in dire straits, too: Guildford, Hastings, Kensington and Chelsea, Kirklees, Southampton and county councils Kent and Warwickshire are all said to be teetering on the brink of issuing S114 notices.

Guildford is reportedly in the farcical position of being unable to afford accountants to oversee its finances: “A much-depleted finance team has left non-accountants overseeing key financial controls and led to a reliance on agency staff to offset shortages”, Public Finance magazine reports.

At the beginning of this month, Derby City Council’s chief executive warned that depleted funding means that local authorities are “reaching the end of the road in terms of their financial position”.

Prescient: former Croydon councillor Tim Pollard

That road has been a long and torturous one. In 2013, when the Conservatives last ran Croydon Council, one of Jason Perry’s colleagues, deputy leader Tim Pollard, said “There is a time coming, and it’s not far off, when the costs of dealing with an ageing and increasingly deprived population will mean that there is literally nothing left in many councils’ coffers for anything but social care.”

Pollard concluded: “We are staring into an abyss here, and it’s time we faced up to it.”

Pollard’s words were prescient and are now true for councils up across the country.

While we can all point to examples of local mismanagement in Croydon (under Conservative and Labour administrations), as one could in Thurrock and Woking. too, the underlying and inescapable problem is the deliberate and long-term underfunding of local government.

The issue is particularly chronic in Croydon. Neighbouring Lambeth gets about double the funding per resident.

According to a House of Commons Library report in 2018, “total [council] funding across England was set to fall in real terms by 56.3per cent between 2010-2011 and 2019-2020”.

This is austerity on a brutal scale. Many councils cut back, others, with encouragement from the government, tried to expand their commercial strategy, sometimes with catastrophic outcomes for their residents. The problem is commercial investments can fail as well as succeed.

The Office for Budget Responsibility warned last month that “the accumulated debt associated with these investments remains a risk as commercial property prices typically experience large falls during economic downturns, and recent interest rate rises have added further pressure to debt-servicing costs”.

Another problem for local government is that it is the kitchen towel of central government. It mops up the failures made nationally and those failures have been legion, and are set to deepen. An ageing population, a deregulated out-of-control housing market, and falling real incomes have all increased demands locally, as funding has been cut. And that was true before the pandemic hit.

On the brink: Hastings could be bankrupted for simply doing its legal duties

Currently, unemployment is edging up (and in London is higher than the national average), which will reduce Council Tax revenues and put more demand on already threadbare and overstretched services.

The mortgage market and rental markets are pushing more families to be classified as homeless with the statutory obligations that places on councils.

In Hastings, demand for temporary accommodation led to a £2.4million overspend in its 2022-2023 homelessness budget. The council could literally be bankrupted by meeting its own legal duties.

An economic downturn could accelerate the breaking point of many more councils – and worsen the already dire economic plight for authorities like Croydon. It means planned savings (that virtually every council is having to make in 2023-2024) could turn into unexpected overspends just to meet legal obligations.

Rob Whiteman, the CEO of the Charted Institute of Public Finance and Accountancy, wrote in The Municipal Journal last week, “Sooner or later we will reach a point when a well-managed authority, whose costs benchmark well and resources are managed effectively, hits the buffers through a lack of funding to meet service demands.”

Government funding of local councils is simply not sustainable. Even the usually understated Institute for Fiscal Studies says that local government funding is “broken”.

Fix the finances: Jason Perry must have known that his election pledge was not do-able

The future looks bleak for local government. We are looking at the tearing up of basic services (adult social care, SEND provision, children’s care, libraries and housing duties) unless the Government gives councils a sizeable injection of cash.

Local government has been set up to fail.

If I was a councillor, I’d be calling for a mass cross-party strike of all councillors across the country, until the Government ponies up the cash.

You can point at Tory Thurrock or Labour Slough. But the problem is bigger than that.

Partisan point-scoring might win you an election, but then you’ve got to fix it. And, as Mayor Perry has shown, that’s just not do-able.

It’s time for councils and councillors to make a collective stand.

Andrew Fisher’s recent columns:

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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
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21 Responses to We are witnessing the long, slow death of local government

  1. Ade Nauseum says:

    Have we forgotten the disastrous decisions made by Jo Negrini and the massive payout for failure? Scott and Butler? Brick by Brick? Fairfield? The culture of reward for failure that continued to reward Iles, Townsend, Cheesborough and others? Yes funding is an issue for councils all over the country but millions upon millions have been wasted and not one person has been held to account.

    What has actually changed? Our Council Tax bills. The Croydon Taxpayer continues to fund incompetence.

    • Don’t think anyone has forgotten any of that Ade.

      Though you appear to have forgotten our rules about no anonymous commenters. If you want to maintain your alias, you’ll need to email us with some very good reason.

    • According to Inside Croydon a few months ago (“Perry admits he can’t take action against council’s bankrupters”) nobody ever will be held to account for all that wasted money, not to mention missing pianos and stolen / dumped artwork

      Same applies to the billions of pounds of our money that disappeared into the pockets of donors to and friends of the Conservative party during the pandemic.

      It’s not just local government that’s dying

  2. yusufaosman says:

    A well written article. The whole of local government needs a complete overhaul. Here are a few ideas.
    Make being a Councillor a full-time job and pay it properly. In other words bring the role in line with MPs, Welsh Assemby, London Assembly Scottish Parliament members. They have great power over people’s lives and we ought to be encouraging more people to do the job, not simply those who can afford, or who are retired and so have more time to be local Councillors. Please don’t read that as a criticism of our councellors. As a sitting member of 2 committees — representing users of adult social care — I have had the privilige to meet and work with various Councillors and they have all been dedicated, hard working, motivated and most importantly care about Croydon. I just think they are being asked to do the impossible.
    Devolve proper powers, including tax raising and allow local authorities to get on with things.
    Ignore the siren calls of post code lottery. Not everything has to be the same everywhere.
    That’s probably enough of a revolution.
    Will any of it happen? Of course not because central government hates giving away power and particularly tax raising power.

    • Chris Shaw says:

      Devolving more power to local government, that’s quite a scary thought how things currently stand given how some of them have behaved over the last decade.

      One point I strongly agree on is a Councillor is an important job, a Council makes or breaks an area. I thought it was strange the first time I heard they were part time roles on very low pay for most of them. They should be full time and well paid, with that should also come greater accountability and scrutiny.

      • £40,000 to £50,000, for cabinet members, is well-paid.
        £82,000, paid to Mayor Perry, is very well-paid, yet he has continued to be just “part-time”, and now powerless

        • yusufaosman says:

          Although most Councillors aren’t the Mayor or members of the cabinet. Would you agree that if the jobs were required to be full-time those numbers you’ve given wouldn’t be unreasonable? I think an MP gets something in the region of 50-60 thousand? Cabinet ministers more still and the PM the most?

          • The matter of councillor allowances has been discussed, debated and analysed on this website many, many times.

            The basic annual salary of a Member Of Parliament in the House of Commons is £86,584, as of April 2023.

            The system of allowances for councillors was introduced in the knowledge that these were meant to be part-time roles, but to acknowledge time given up for meetings, other expenses, and to ensure that the role of elected local representative was not blocked off to anyone other than those able to afford the time off work to serve.

            Hence the basic allowance of £12,100.

            As at March 2023, more than half of Croydon’s 70 councillors receive “SRAs”, special responsibility allowances, which significantly increase the amounts they are paid above the basic.

            Oh, and since March, Perry’s on £84,000, yet maintains his private directorships.

            The political parties have politicised allowances by demanding a stipend – usually around 10% – from every elected councillor’s allowances, which goes into their campaign pot. In effect, a state subsidy of their politics. This also means that in Croydon, Labour and the Conservatives are far better funded than other parties come election time.

            I am not aware of any political party, not even the FibDems, advocating full-time, professional elected councillors. Given the events in Croydon recently, you might imagine the residents’ response to such self-interest and pocket-lining.

            Another very good reason for not rewarding often third-rate politicians with piles of public cash is the stitch-ups and sharp practice that is conducted by the parties over selections, which they prefer to remain as deep, dark secrets. I think iC has exposed enough of these Buggin’s Turn and anti-democratic practices to illustrate why providing more tax-payers’ money to political parties would be a very bad choice of spending.

        • Chris Shaw says:

          you picked the few well paid roles and ignored the vast majority, a very dishonest response by yourself

          • Neither dishonest nor as ill-informed as you evidently are.

            36 of Croydon’s 70 councillors, plus the Mayor, are on Special Responsibility Allowances extra pay. That’s more than half. It’s certainly not “the vast majority” on basic allowances, as you dishonestly claim.

    • Ian Kierans says:

      I tend to agree and it is laudable. I have met Councillors and MPS who are and have been career politicians and never held a job outside of politic’s.

      However I have also met retired and those of private means. All of them have been good people along with being motivated. However those that have careers and families, do have less time to do the role in its entirety. They may also face some issues with balancing the role in Public Life with Private employment – (not so much if working for Government in some capacity or other pulic company like TfL) That is sadly a fact of life until levels of protection are better.

      Would making them paid assist – yes for some – but unless you are offering 50k+ per Councillor with expenses many who are working would struggle.

      Not so those retired or with private means. Lets face it they have less conflicts of interest and find it less difficult to juggle conflicts as they rarely have them.

      It is also difficult for people to stand locally especially for their families. Lets face it people can be pretty harsh in language towards our Councillors – perhaps because of the outcomes or perceived neglect or incompetence – yet may not know the full details and also may never know them as they are confidential.
      One can say well they took on the role – but their families did not.

      Despite raising cain on wrongdoing I have an awful amount of time and respect for all councillors doing that role – and were I can would support them in improving things without a qualm.

      But frankly I would not ever stand or want to be in that role especially in Croydon.
      It is unlikely that I would survive as there is absoloutely no chance I could keep quiet about things that were wrong, immoral, corrupt, etc and would not be diplomatic in my condemnation of that.
      No amount of money could change that at my stage in life.

  3. Annabel Smith says:

    Agreed councillors should be well paid, have and use powers to make by-laws, have and use powers to borrow money for long term infrastructure projects. They have to answer the phone to moaning constituents day in day out, it can’t be easy, and with very little funding and support from permanent council workers who are sparse on the ground these days. Not that I’m praising the current lot, far from it! The council is rotten because you get what you pay for. Whole thing needs an overhaul!

  4. Chris Shaw says:

    Government underfunding is an issue that needs addressing but it’s important to recognise that all the Section 114 notices haven’t been because of that but because of a combination of incompetence and recklessness from councils. The coalition government gave councils more powers to invest back in 2011. Another issue is local auditing which has been a major factor in the bankruptcies since the Government got rid of the Audit Commission in 2015.

    • Try reading the comments of the official from CIPFA. He says that you, and Michael Gove, are wrong.

      • yusufaosman says:

        Could you remind us what Cipfa is and perhaps provide a link to the report?

        • CIPFA is the Charted Institute of Public Finance and Accountancy, as is explained in the article above, Yusuf. As is the source of the quote, The Municipal Journal, which is behind a pay wall.

      • chris myers says:

        For those who don’t know, CIPFA is the Chartered Institute of Public Finance and Accountancy. In other words they are local government people through and through, so it’s hardly surprising they thing the way they do! PS: Keep ‘Mayor Perry’s feet to the fire

  5. chris myers says:

    Eleven years ago Birmingham leader, Sir Albert Bore, said that “local government as we know it” was over. Since then local councils have asked for, and received, new freedoms to do anything that wasn’t specifically illegal. So, many including Croydon, invested in get rich quick schemes they didn’t understand and now we’re all paying for their incompetence and hubris. It’s a huge mess and what really gets me is that the men and women involved didn’t even have the guts to say, “I’m sorry”. The point I agree with in Red Andy’s well-written piece is that Croydon has been short-changed in central government funding for years and years.

    • Croydon’s “dodgy” investments includes the Colonnades, which continues to make (modest) money and a building trades yard (also washing its face). The Croydon Park Hotel was a deeply dodgy deal from first to last, with no one ever explaining satisfactorily why Newman and Hall pushed through a deal to buy at more than the asking price.

      Covid closed the hotel, which was a bit of a bummer for any profit-making plans. But the medium-term aim also did seem to redevelop the site for flats. So why the Tory government insisted on selling the site at a loss is anyone’s guess (Conservative Party donors are not unknown in the building trade), but someone does now stand to make many millions of pounds from that site.

      Croydon wasn’t sunk by dodgy investments in solar farms, like Thurrock. Croydon was sunk by staggering incompetence, ego and hubris and Brick by Brick, which will have lost residents at least £100million by the time all is settled up.

    • Ian Kierans says:

      Depends on that term illegal!
      Do you mean actually illegal, or illegal but unenforceable, illegal but hey we are the civil enforcement body so thats fine – or downright criminally insane?
      Has Croydon Council or Councillors ever done
      a) none of the above
      b) one of the above
      c) more than one of the above
      d) all the above.
      Or perhaps like dancing it takes one of both to Tango!

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