CROYDON IN CRISIS: Without significant help from Government, the council is unable to find a solution to its debt crisis. By STEVEN DOWNES
Croydon Council’s intractable financial problems will never be resolved until the Government agrees to write off hundreds of millions of pounds of its toxic debt.
That can no longer be a controversial point of view.
It is the view shared by Tony McArdle, the chair of the Government-appointed improvement and assurance panel.
It is the view of Jane West, the senior council official in charge of the borough’s finances.
It is the view of Rowenna Davis, the Labour councillor who chairs the Town Hall scrutiny committee.
And it is the view of Jason Perry, the part-time Mayor of Croydon who, since being elected in May 2022, has already had to issue one Section 114 notice, the council’s third, when admitting that he could not balance the budget for 2023-2024.
After the latest round of council meetings, and the unveiling of Perry’s spending and borrowing proposals for 2024-2025 (Cuts: another £31million. Borrowing: another £38million from Government), there are some of the view that Croydon’s fourth S114 notice may not be so very far away, either.
Certainly, lumping another £38million on the council’s £1.6billion pile of debt ain’t going fix anything any time soon, but rather simply delay the inevitable. Under current arrangements, 19% of all council spending is just to service its debt.
Powerless Perry, who was elected on a promise to “fix the finances”, has been effectively standing with his begging bowl outside Levelling Up Secretary Michael Gove’s office almost since the day he took office.
It is a triumph of hope over political reality, since Tory Perry ought to have realised long ago that his Conservative colleagues in Government would not be doing anything to write off the debts of Croydon – or Thurrock, or Slough, or Woking… the list of failing councils is getting longer by the week – when there is an election on the way and they can leave the collapse of local government in England to the other lot to sort out.
Estimated cost: about £10billion of “toxic” debts on the balance sheets of councils around the country.
At least Perry acknowledged that in a Town Hall meeting last week.
“Essentially, we’re insolvent,” he said. “It’s a difficult ask of Government. The risk is, it’s seen as rewarding failure.
“The conversations are good. It’s not easy but we’re still persisting.
“Writing off the debt is one of a whole range of options being discussed.”
Croydon has not been seeking a write-off of all its debt; £540million of borrowings, mostly from the Government’s Public Works Loans Board, was the figure floated 12 months ago, to get the repayments down to more manageable levels.
As former schoolteacher Davis said at her latest scrutiny meeting, where she schooled the Mayor, “The people paying for these mistakes are the Croydon tax-payers who haven’t done anything wrong.
“We’ve heard the same thing for over a year and our debt situation is getting worse,” Davis told Perry.
“National Government’s answer at the moment is increase your debt burden – that’s not a sustainable answer.”
As reported by The Municipal Journal, Davis said that if this was “unpalatable” to Government, it should “bundle up” the council’s debt, allowing Croydon to pay it back with a low interest rate over “many years”.
Davis, once regarded as among the leading lights of “Blue Labour”, did not mention whether she had held conversations with Rachel Reeves, Labour’s Shadow Chancellor, to persuade her, in the days immediately following the anticipated General Election, to find ways to pay for these “mistakes”.
Read more: Perry claims ‘progress’ and gets set to hike Council Tax again
Read more: Town Hall staff braced for £31m more cuts and job losses
Read more: ‘Uncertainty faced by all local authorities is unprecedented’
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