CROYDON IN CRISIS: The Government’s 2024-2025 financial settlement will allow some local authorities in England to impose a 10% Council Tax hike on residents for a second year.
By KEN LEE, Town Hall reporter
Even Conservative councillors were saying that they are “bitterly disappointed” by next year’s financial settlement for local authorities from the Tory Government, saying it would put dozens more councils at risk of effective bankruptcy.
Birmingham and Nottingham councils have in recent weeks joined the rapidly growing club of authorities that have gone broke, of which Croydon is a founder member.
Now, another 60 councils – 1-in-5 of local authorities in England – are on the brink of issuing Section 114 notices of their own, effective admission that they are unable to balance their in-year budgets, according to the Local Government Association.
And that’s despite Government minister Michael Gove announcing yesterday a 6.5% increase year-on-year in funding for councils in England, with a provisional package worth more than £64billion.
Mr 10%: Michael Gove is allowing some councils to hike Council Tax by more than the maximum
Things are so bad that Gove has announced that broke councils in Thurrock (Tory-controlled), Woking (was Tory-run) and Slough (Labour controlled when it issued its S114 in 2021) are to be allowed to increase their Council Tax in April by more than the 5% limit applied elsewhere.
For the residents of Thurrock and Slough, it will be the second consecutive year of 10% Council Tax hikes. There’s been no mention of such a steep increase in 2024 for Croydon, where Tory Mayor Jason Perry requested a 15% Council Tax increase in 2023.
Mayor Perry is believed to be planning a 5% Council Tax increase in April, which if implemented will mean that the borough’s first directly-elected Mayor will have managed to increase Council Tax by 20.7% since he came into office in May 2022. Croydon has the second-highest Council Tax in Greater London.
Gove knows that there is a problems with council finances after 14 years of “austerity” cut-backs by his Government. “It is certainly the case that local government faces significant funding pressures,” Gove told MPs in his pitch for the NSS award.
Inflationary pressures on all costs, on top of sharply rising wages and with increasing demands for social care and special educational needs are putting all local councils under unprecedented financial pressures.
Ahead of a final settlement in February, briefings at Whitehall suggest that Gove has been lobbying the Treasury for more cash to avoid a crunch in local services in an election year.
Fund Croydon fairly: Gove, the Government, Mayor Perry and even Labour councillors ignored public protests over the 15% Council Tax hike last April
Nine councils have issued Section 114 notices since 2018 – in Croydon’s case, three times, with Perry pressing the alarm button in November 2022. An LGA survey found that almost 20% of senior council executives thought it was “very or fairly likely” they would have to issue a Section 114 this or next year.
And it is not just basket-case boroughs like Croydon, or Thurrock, or Woking, where speculative investments in property schemes and solar farms have left the Town Hall coffers worse than empty. Gove admitted to the Commons Levelling Up committee: “It may be the case in the future that there are some local authorities that have been relatively well managed so far that will face particularly acute pressures.”
Much of Croydon Council’s £1.6billion debt is made up from loans from the Government’s Public Works Loans Board. According to the council’s own figures, 11% of all its spending goes to service its debt.
Mayor Perry, backed by Government-appointed “improvement” commissioners, has been lobbying Gove to write-off about one-third of the debt, to ease the loan repayment and interest burdens, but thus far without any success.
In the formal announcement from the Department for Levelling Up, Housing and Communities yesterday, they said: “The provisional local government finance settlement makes available almost £4billion more funding for councils in England in 2024-2025, an increase of 6.5% on 2023-2024… in recognition of the pressures being faced by local authorities.
Tory basket case: Thurrock’s dalliance in solar farms has delivered two 10% Council Tax hikes in two years
“The Funding Guarantee introduced last year will be maintained to ensure every council in England sees at least a 3% increase in Core Spending Power before any local decisions are made around Council Tax. This decision has been taken in recognition of the pressures being faced by local authorities despite the recent drop in inflation.
“And to continue to support councils providing essential adult and children’s social care services, we are making available £1billion in additional grant funding for social care in 2024-2025 compared to 2023-24.
“Councils will be able to increase Council Tax by up to 3% without a local referendum with a further 2% for those responsible for adult social care services, with additional flexibilities for some authorities.” Those are out italics – the reference to Thurrock, Slough and Woking, and perhaps others. The commissioner placed in charge of Birmingham’s finances said that a 10% increase was likely to be needed there, too.
“It is for councils to determine Council Tax levels, but they should always be mindful of cost-of-living pressures when making any decisions,” said Gove’s department, having just green-lit 10% Council Tax hikes for at least three councils.
“Councils in significant financial failure can make use of any additional flexibilities provided to support their financial recovery and, going forward, the Government will consider all reasonable steps to protect both national and local taxpayers and ensure councils are acting responsibly,” said Gove.
Read more: Perry claims ‘progress’ and gets set to hike Council Tax again
Read more: ‘There is no solution in sight’ warns council’s finance chief
Read more: Town Hall staff braced for £31m more cuts and job losses
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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
Regarding Croydon let’s be honest the unacceptable increases were implemented as result of the previous Labour administration who first declared the S114 notice for bankruptcy. They created the financial turmoil along with slum social housing.
That is untrue, Les. A wanton and deliberate oversimplification of what actually happened.
Perry ASKED for permission to raise Council Tax by 15%.
He later admitted that it was futile in terms of dealing with the accumulated debt of the council – debt that had been accumulating since the CCURV financial flop of 2009-2014.
Labour and Tories are two cheeks of the same arse – and senior council officials run rings around all elected representatives to protect their own little fiefdoms and bypass responsibility.
So true. People elect Councillors to control the council and deliver local priorities. Yet Council executives can remove a Councillor who is challanging them or investigating them.
Thats like having the convicts removing the warden for upsettting their little fiddles.
Is it not time that there is legislation and an ability to have an independent inestigator elected by us as voters to deal with complaints and wrongdoing in public administrations?
Isn’t that what the District Auditor, who Pickles and the Tories abolished, used to do?
Thank heavens for IC – if we all paid more attention, much, much attention, to what’s going on at our town hall we ‘probably’ wouldn’t be in this mess.
Mayor Perry has been saying since he was elected that he’s expecting the Government to write off of a chunk of Croydon’s historic debt. Almost all financial commentators agree that this is necessary if Croydon is ever to get back on its feet financially. At Question Time in Norbury in September this year Mayor Perry repeated his position and said he expected the matter to be settled by this autumn. The autumn has come and gone and we are no further forward.. He should of course have secured this concession when he agreed with Government that a 15% Council Tax rise would be imposed on Croydon residents.
This saga shows either that Perry is a very poor negotiator or that he’s fully behind the Government’s programme of forcing local councils to the wall, to the detriment of local residents. In fact it’s probably both.