CROYDON IN CRISIS: Only 101 people in the country are qualified to carry out essential audit work on public bodies, the lack of proper scrutiny putting £100bn of public spending at risk according to a report from a Commons committee
Croydon is among dozens of local authorities across England who, despite being in deep financial problems, have no up-to-date accounts signed off.
In arrears: Croydon Council’s last audited accounts date from before the covid pandemic in 2019
A shocking report in today’s Grauniad claims that 99% of English councils did not have their 2022-2023 financial accounts signed off by the deadline this year.
This has in effect left £100billion of public spending lacking proper checks and audits.
Croydon is among these councils.
None of Croydon’s annual accounts have been signed off by its auditors since before the first covid lockdown. Croydon last had its accounts audited and approved in 2018-2019.
When Eric Pickles, the Tory minister for local government, introduced “localism” and abolished the Audit Commission, he unleashed financial chaos and catastrophe that has seen Croydon and six other councils issue effective bankruptcy notices since 2020 – Thurrock, Northumberland, Nottingham, Slough and Woking; while in 2018 Northamptonshire proved to be such a financial basket case that the authority was scrapped and replaced.
Massive disaster: Eric Pickles
The head of the civic accountancy body has described the impact of Pickles’ “reforms” as a “public administration disaster”.
Without properly scrutinised accounts, it is feared that even more councils will fall into financial black holes, and that poor managements and speculative financial deals – of the kind that has brought down Croydon, Thurrock and Woking, among others, will go unchecked.
“More than 900 sets of accounts for councils and other public bodies going back to 2017 remain unaudited,” The Guardian reports, having confirmed that Slough and nine other public bodies have not had their accounts audited for the past five years. These include Spelthorne and Warrington, both of which have borrowed more than £1billion to invest in commercial schemes.
Among those missing four years of audits are Woking, which went bust this year with debts of £2billion, and Croydon, where debts are £1.6billion and Section 114 notices have been issued in 2020 (twice) and 2022.
As has been reflected in Croydon, where the external auditors Grant Thornton have been overwhelmed by the workload of past accounts and the cash-strapped council’s repeat bankruptcies, there are often not enough external accountants available to keep up with the work demands. There are only 101 people in the country qualified to carry out such work.
“Ministers are considering an amnesty whereby incomplete past audits would be cancelled to clear the backlog,” according to The Guardian.
“This lack of scrutiny of councils’ finances removes any early warning system for local authorities in financial difficulty,” according to Meg Hillier MP, the chair of the Commons’ Public Accounts Committee. “The implications for public services do not bear thinking about at both the local and national level, and for the lives of people who depend on them.”
As The Guardian reports: “The PAC warned in June that the audit backlog was hindering the accountability for £100billion of local government spending. It said more “horror stories” like the insolvencies in recent years of Croydon, Slough, Thurrock and Woking councils could be going undetected as a result.”
Only three councils managed to complete their 2022-2023 audits on time, out of more than 300. The Guardian says that 150 councils have not been audited since 2020-2021, 61 since 2019-2020, 22 since 2018-2019 and 10 since 2017-2018.
From today’s Guardian
“Before the abolition of the Audit Commission, all local authority accounts were signed off on time and had been for decades,” said Rob Whiteman, chief executive of CIPFA, the Chartered Institute of Public Finance and Accountancy.
“It’s hard to think of a public service reform that has done so much damage.”
A Department for Levelling Up, Housing and Communities spokesperson told The Guardian: “We are taking action to tackle the local audit backlog and make the system more sustainable and timely. In July, the minister for local government wrote to the sector and the chair of the levelling up committee to share proposals to address these issues, agreed in principle with key partners. We intend to begin implementing changes following further engagement.”
Read more: We are witnessing the long, slow death of local government
Read more: Croydon needs deal that could set precedent for all councils
Read more: Croydon is in a right Pickles and it is easy to work out why
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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
The abolition of the Audit Commission has given rise to a political and financial climate in which incompetence has flourished, and given ample opportunity for fraud and corruption.
In Croydon we’ve seen this with the stupidly expensive construction of the council HQ, Bernard Weatherill House, the overbudget and incomplete refurbishment of the Fairfield Halls and the rise and fall of Brick by Brick.
Prize Pillock Pickles said he wanted to save the government £50m a year by getting rid of the Audit Commission, which in 2010 had an annual budget of around £213m (the difference being made up by audit fees).
Looking back, it was probably more to do with getting revenge, after the Audit Commission had sunk Westminster council’ Tory leader, Dame Shirley Porter for her Homes for Votes scandal. That, and opening up local government for exploitation by other corrupt Tories.
The scale of councils’ debts now makes the anticipated annual savings from abolition look laughably cheap.
Trouble is, we’re all paying for that mistake
This was known at the time he abolished it but the warnings went unheeded.
Audit firms are struggling to recruit and they certainly will not find many willing to work as a partner in the public sector.
Working in public sector audit is very technical because the level of regulation is higher than private companies. It takes years to build and learn what to look for. It’ll take years to fix. The Tories have trashed so much.
I wouldn’t dare say I know more than CIPFA. But, they are local government through and through, so you’d expect them to hold a particular point of view. It would have been in their interest to cling on to a wasteful, lucrative – for the bean counters – set up. Just ‘sayin.
As opposed to the alternative system which has been more costly, destroyed local government and been much welcomed by crooks and grifters
It wasn’t just CIPFA and I’ll think you’ll find they were right.
The head of the civic accountancy body has described the impact of Pickles’ “reforms” as a “public administration disaster”.
Nothing like a bit of validation for what I have been saying for some time. Is it not time for Perry to tell the truth and his and Fishers role in the Debt?
After all Newman and co have fluttered and flitted. He is the only one left.
You can blame Kerswell and co for the aftermath and sitting on the report like mother hen on an egg thats never going to hatch but not the debt mountain itself.
The other notable bit is “It’s hard to think of a public service reform that has done so much damage.
Well how about failed privatisiations? PFI and PPP, outsourcing of public services without effective oversight.
Transferring Public utilities into foreign private control? Secutity risk?
No Pickles is just one of many.
Easy, lazy, to blame the Conservatives, but the Audit Commission was bloated and wasteful – abolishing it saved over £1billion and doesn’t absolve local authorities from their responsibilities to get their accounts audited. IC knows better than anyone that Croydon doesn’t seem to have any internal accounting or business skillsr
Classic. Christopher Myers now saying that he knows better than CIPFA, most major accountancy firms and the Commons PUblic Accounts Committee, and even the Levelling Up department, which has acknowledged the need for change. Genius!
Oh, and your figures for savings on the Audit Commission? Wildly inaccurate.
Appreciate IC comments on your figures Christopher but lets say you are right and it was a billion. That equated to about 62.5% of our headline local debt. A debt which would not have happened with Audit oversight and neither Fisher nor Newman wouls have been able to borrow from the public purse without a clear method of repaying. Just our debt would have funded that body for a decade at least and left change for another.
I do believe I mentioned Mr Newman and co so not really just blaming Conservatives more laying the true causes in the right locations without political bias. If I recall that was also Clegg and the Liberal Democrats with Cameron but to blame them would be harsh as they really had even less influence than the Unionists – Look at the £20bn bail out for those just for 17 MPs support.
Croydon has some very competent people left but yes its systems and processes are dire and communication is poor and not really integrated so it wil lseem they are disjointed and not have much successful delivery – but look at what they are having to work with – its hard to blame the tool and body when the brain has had a lobotomy – would you not agree?
Say you don’t know anything about public sector audit without saying you don’t know anything.
Any good manager should know their real time financial position, and know their bottom line each and every day of the year. The fact that most managers don’t know anything about their accounts in the Council is the real problem. Few even know what their teams salary total is.
Financial ignorance is the norm and has not been addressed.