Old Palace closure brought on by shaky Foundation finances

CROYDON IN CRISIS: There’s not much that has happened in Croydon in the last dozen years or so that cannot be traced back, in some respect, to the £1billion-plus non-development of the Whitgift Centre. And as the accounts of landowners the Whitgift Foundation reveal, that is certainly the case for the closure of the town centre’s girls’ school. By STEVEN DOWNES

In all the years since 1596, when Queen Elizabeth’s favourite archbishop laid the foundation stone for his hospital and then for a school at the centre of Croydon, there can surely have been few worse days for what was to become the Whitgift Foundation than Thursday September 21, 2023.

Charity fatigue: a statue of John Whitgift in the town centre almshouses. The multi-million land-owners are hard-hit by the decline of their shopping centre

For while the Foundation was yesterday preparing to issue a letter to parents and guardians of pupils at one of its schools to advise them of its closure, up at the Appeal Court in central London, three of the country’s most senior judges were handing down a four-year jail sentence to a former teacher at another of the Foundation’s schools after he had been found guilty of child abuse from the 1980s.

The reputational damage from that scandal could last for years to come.

The damage done to the reputation of the Whitgift Foundation charity because of its decision to close Old Palace girls’ school, though, could last even longer.

There is no doubt that the closure of Old Palace is a direct consequence of the Foundation’s £1billion gamble to create a new palace, to retailing, which after nearly 12 years is no closer to being started than when the organisation first revealed their choice of development partners to be Westfield.

And who says that the failed Whitgift Centre redevelopment is the cause of the school’s problems? The Whitgift Foundation does…

When Jane Burton was appointed headteacher at Old Palace in 2019, succeeding Carol Jewell, the Foundation linked the school’s fortunes to the town centre redevelopment. “We believe that Mrs Burton has the expertise, passion and commitment to build on the outstanding work of Mrs Jewell and continue the school’s journey as a leader in modern girls’ education,” they said.

Property tycoons: 16th Century charity has become a 21st Century property business

“With Croydon set for imminent redevelopment and regeneration, this is an immensely exciting time in the history and future of the school.”

Note that: “imminent”. In 2019…

According to the letter sent to parents yesterday, “The school has been struggling financially for many years, and the Foundation has supported the school from its general reserves in the expectation that the financial situation would improve at some point.

“However, in recent years compounding factors such as the cost-of-living crisis, increased costs, the growth in expense for necessary capital investment projects as well as anticipated demographic changes have made the sustainability of the school beyond the short-term impossible.”

Let us not deceive ourselves here, though, to think that we are dealing with a cash-strapped charity coping with the after-shocks of the covid pandemic. The Whitgift Foundation may be registered as a charity, for all the generous tax breaks as it runs three private schools where pupils’ annual fees can top £43,000.

But in reality it is, and has been for several decades, a mid-sized landlord and the borough’s biggest land-owner. The money the Foundation makes from its property portfolio goes towards subsidising its schools, paying bursaries for at least 500 of its pupils, and running its care homes and almshouses, one of which uses the site of the original Whitgift hospital, at the fulcrum of Croydon town centre where the tram rattles down George Street and across the High Street.

And there behind the almshouses stands the long-empty Allders department store building and beyond it, the neglected and run-down Whitgift Centre, once a reliable source of so much profit for the Foundation, but which lately has become a growing headache for the charity.

Decline and fall: yellow buckets catch the rainwater from the Whitgift Centre’s leaking roof, as one of the ridiculous Croydon BID giraffes looks on from… errr… Superdry

The quaintly named Court of Governors (rather than a more modern “board”), gives the Foundation such a Tudorbethan feel.

In some respects, it still operates in 16th Century manner, too.

Many of the governors are appointed by the current Archbishop of Canterbury himself. They usually include the Bishop of Croydon and the Vicar of Croydon, and often have a smattering of local politicos. Others arrive with skills from years in business and the community. The chair for the last eight years is a former UBS banker.

In at the start: Gavin Barwell was MP and Foundation governor at the time Westfield came on board

At the time when he was MP for Croydon Central, a key period in the appointment of Westfield to herald more than a decade of development blight, one of the members of the Court of Governors of the Whitgift Foundation was Gavin Barwell, who was also the chair of governors at his old school, Trinity.

Barwell saw no potential for conflict of interest in being involved with a £1billion land-grab by the body that funded his old school.

When iC ran a poll on this in 2013, two-thirds of respondents thought that Barwell was wrong and should resign from the Court.

Thing is, what Barwell and various other governors have presided over in the last decade is a steady decline in the fortune that they have been entrusted with.

Westfield first appeared on the scene in Croydon in 2012. By 2019, no development work had begun, the project was on its second round of planning permissions, the vast town centre site had all been CPO’d by a pliant council, but Westfield’s new French owners, Unibail-Rodamco had shelved all proposals.

Yet according to the Foundation’s chairman’s cheery report in March 2019, “As freeholder owner, we have been pivotal in shaping the redevelopment of the Whitgift Centre and we look to a bright future for Croydon in the coming years.” Which is nice.

Thing is, delve into the Foundation’s annual reports year-by-year, and the reality is of a multi-million-pound decline.

All there in red and white: the Whitgift Foundation accounts show that they have been running at a multi-million-pound loss

In their annual report to the end of August 2018, it says of the Foundation’s “Reserves Policy”: “The assets of the Foundation produce sufficient income to meet its commitments. It is not governors’ policy to build up additional reserves except where these are being put aside to finance future capital expenditure.”

When those accounts were filed, the Foundation’s “unrestricted funds” amounted to £249,751,477.

But by August 2020 (with the covid lockdown doing strange things to all organisations’ bottom lines), unrestricted funds were down by more than £29million, to £220,038,290.

Even by August 2022, the most up-to-date Foundation accounts available, their annual report was trotting out the same line: “The assets of the Foundation produce sufficient income to meet its commitments. It is not governors’ policy to build up additional reserves except where these are being put aside to finance future capital expenditure.”

Yet unrestricted funds now amounted to £208,241,313 – more than £40million down from what they had been just four years earlier. Even by the wretchedly low standards of Croydon in recent years, that’s quite a burn rate.

What was not mentioned in the annual report for 2022 was any suggestion that one of the Foundation’s three schools might be forced to close because it “has been struggling financially for many years”.

What was in the report, however, was the slightly delusional maintenance that all was going tickety-boo with the Westfield development. This in a report that came after the scheme’s 10th birthday… “Croydon Limited Partnership [meaning Westfield] is preparing a new scheme development reflecting change in market circumstances meaning a likely date for the start of the development is at least one year away.”

Cash crunch: the failings of the Whitgift Foundation have contributed to the closure of Old Palace School

The Foundation’s income and expenditure figures over the past four years might also raise concerns, particularly among parents of children who might depend on the bursaries to see them through to their A levels.

In 2018, the Foundation reported that, “Our net income from investment properties was £62,752,681, a decrease of £61,347,815 on the previous year… The value of the property investment portfolio is £688,825,000 (previous year £692,220,000).”

In 2022, “The value of the property investment portfolio is £54,475,000 (previous year £65,176,010). This reduction is due to the decline in value of commercial properties including the Whitgift Shopping Centre.”

This is what Thatcher once described, when pursuing a policy of disinvestment in Liverpool, as “managed decline”.

The Whitgift Foundation uses three or four firms of investment managers, who handle a total value of more than £120million, generating between £2million and £3million income per year.

By last August, they had this note in the accounts: “The Foundation made a loss of £19.9million after accounting for unrealised losses of £8.4million.

“The school fee income remains the main source of income for the Foundation and increased to £50.7million (previous year £48.4million) net of scholarships and bursaries of £12.8million (previous year £12.4million).

“The expenditure incurred in operating the three schools increased by 8% from £62.1million to £67.2million during the year. This increase is a combination of pay awards, teaching, support and development costs.”

The dive in the value of the Foundation’s properties (such as the Whitgift Centre) has seen a sharp decline in the amount of rent they receive: “The investment property portfolio continues to be affected by the aftermath of the pandemic…”, nothing to do with their self-inflicted development blight, then? “…causing a depression in rental values [in] 2022 [to] £1.2million (2021: £5.6million).

“The investment property value reduced further to a value of £50.9million (previous year £52.6million).”

So while income has been increasing over the years, so has the Foundation’s out-goings, only much more steeply. Income from investments has reduced by about half.

Property portfolio: SHW has presided over the Foundation’s business

Through all of this, the Whitgift Foundation’s property portfolio has been managed by local estate agents Stiles Harold Williams – prominent figures in organisations in the Croydon Establishment. Have SHW been running rings around the volunteers and amateurs who sit on the Court of Governors?

Barely a year before it was announced that the Whitgift Foundation would need to close one of its three schools because of financial issues, the charity’s auditors signed off on an annual report with a clean bill of health.

“Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue.” That report was signed off nine months ago by auditors Haysmacintyre.

Mind you, Haysmacintyre got fined for its poor audit of Associated British Engineering.

Each Foundation financial report includes a risk grid.

Top of that list in each of the last four years has been “Development of the Whitgift Shopping Centre not commencing”.

And each year, the mitigation offered is, “Regular meetings take place with the developer and other key parties to monitor progress.” So that’s alright, then.

Risky grid: the risk grid in the Foundation’s reports shows the same risks, time after time…

Points three (“Incident with potential to damage reputation”), four (cash flow issues due to a reduction in income from property) and five (“Insufficient income to cover our operating costs”) might seem particularly pertinent given the developments of the past few days.

Martin Corney, the chief executive of the Whitgift Foundation, was invited by Inside Croydon to provide some kind of statement for publication, outlining whether the on-going non-development of the Whitgift Centre presents any kind of threat to the continued operation of Trinity and Whitgift schools or the care homes.

Corney did not respond.

Read more: Whitgift Foundation decides to close Old Palace School in 2025
Read more: Falling rolls and rising fees: how Old Palace got squeezed
Read more: Ghost haunts ancient palace where Good Queen Bess slept

  • If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at inside.croydon@btinternet.com
  • Our comments section on every report provides all readers with an immediate “right of reply” on all our content
  • ROTTEN BOROUGH AWARDS: Croydon was named among the country’s rottenest boroughs for a SIXTH successive year in 2022 in the annual round-up of civic cock-ups in Private Eye magazine

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 "Hammersfield", Allders, Business, CPO, Education, Jane Burton, Old Palace, Schools, Trinity School, Unibail-Rodamco-Westfield, Whitgift Centre, Whitgift Foundation, Whitgift School and tagged , , , , , , , . Bookmark the permalink.

8 Responses to Old Palace closure brought on by shaky Foundation finances

  1. ♫ This town, is coming like a ghost town
    All the schools are being closed down…♫

  2. derek thrower says:

    Blighting a once thriving location. Does have a price. Even for the once mighty Whitgift Foundation.

  3. Sarah Gills says:

    All that land and property. Croydon has good transport links and there is, as there always has been, potential but it’s always squandered. It’s terrible.

  4. Annabel Smith says:

    So it seems they probably saw this all coming a mile off and couldn’t be bothered to do anything about it. Their board meetings were probably just an opportunity for a right good knees up on expensive wine.

  5. Annabel Smith says:

    I wonder how many leak buckets it is safe to have in a public space before they become a hazard in themselves!

  6. Anthony Miller says:

    Perhaps they could see if it’s possible to merge it with one of their boys schools as Eothen School did with Caterham School in the 90s… perhaps a very long shot but although merging a boys school with a girl’s school is very controversial this historical example at least was successful and better at the time than one or other of them going down the plughole.

    Indeed it was probably the cleverest decision the late Mr Smith & Co ever made – solving a lot of financial problems to everyone’s benefit. Although I was never a fan of private education you’ve got to give people credit for foresight. Given the tough choices the two institutions mutually decided that segregated education wasn’t an altar worth sacrificing their institutions on and struck a deal … they did it with a sort of pilot scheme of introducing girls into the boys 6th form before a full merger…. as I remember but it was many years ago… but it has been done before… and they’ve still got 7 years left before they completely drain the kitty…

    • Raymond White says:

      Trinity would be the better candidate of the two given it already has girls in the sixth form and the culture would be better able to welcome girls than Whitgift School.

  7. tonycroydon says:

    John Whitgift would be very disappointed. His legacy had on the whole done well for the 400 years and not looked to shabby after 425 but now?

Leave a Reply