CROYDON IN CRISIS: Council staff morale ‘at an all-time low’ according to a national newspaper report, while the bankrupt borough’s part-time Mayor’s only answer to its financial struggles is to borrow even more money
Leading the way: Croydon’s 2020 financial crash has been followed by six other cash-strapped councils to issue Section 114 notices
Last week, Inside Croydon columnist Andrew Fisher wrote that the £600million extra funding promised by Tory Government minister Michael Gove to dozens of local councils in England who are on the financial precipice would barely touch tie sides when authorities such as Croydon have toxic debt burdens of £1.3billion.
Yesterday, a cross-party committee of MPs urged Gove and the Government to provide £4billion urgently to head off an “out of control” financial crisis around the country’s Town Halls that “threatens to drag well-run councils into bankruptcy and put local services at risk”, according to the Grauniad.
The levelling up, housing and communities committee said the current local government funding system is broken, after 14 years of Tory “austerity” throttling council finances. The committee also called for an overhaul of “outdated and regressive” Council Tax.
Eight English councils, including Croydon (three times), have declared themselves in effectively bankrupt since 2018, including four in the past 12 months. Umbrella organisations such as the Local Government Association have said that another two dozen councils are on the edge of going bust.
‘Out-of-control financial crisis’: MP Clive Betts
Facing rising demand for adult social care, child protection, homelessness and special educational needs provision, councils are resorting to drastic spending cuts as they seek to avoid going into special measures, as has been the case in Croydon, in Thurrock, at Woking and in Birmingham and Nottingham.
Clive Betts, the veteran Labour MP who chairs the parliamentary levelling up committee, said yesterday: “There is an out-of-control financial crisis in local councils across England.
“Councils are hit by a double harm of increased demands for services while experiencing a significant hit to their real-terms spending power in recent years.
“The government must use the local government financial settlement to help bridge the £4billion funding gap for 2024-2025 or risk already strained council services becoming stretched to breaking point.
“If the government fails to plug this gap, well-run councils could face the very real prospect of effectively going bust.”
Betts’ committee’s report says years of underfunding have created a “tipping point” for many councils across England.
The report added: “There is widespread agreement that Council Tax is outdated, regressive and overdue for reform.”
Domestic property values have not been reassessed since 1991. The Economist has reported that Buckingham Palace pays £1,828 a year in Council Tax – less than a three-bed semi in Blackpool.
With growing demand for adult social care, children’s services and increasing levels of homelessness, councils are closing non-statutory services such as leisure centres, parks and recycling centre. Even statutory services – those that the law says must be provided – are being cut back. In Croydon, half of the borough’s public libraries, a statutory service, face closure or down-grading.
The overall £4billion shortfall in funding identified by Betts’ committee matches estimates by the LGA, which has calculated that an extra £2.4billion in 2023-2024 and £1.6billion in 2024-2025 is needed to maintain services at current levels.
The parliamentary committee’s report is referenced in a gloomy profile of Croydon that has appeared in the Financial Times this morning, where Jason Perry, the elected Mayor, “acknowledged the south London town had ‘got dirtier’.”
The FT quoted a senior council employee who “said morale was at an ‘all-time low’.”
The FT reported: “Some experienced staff were leaving and the council was filling gaps with agency workers: ‘We have got a duty of care to the residents of this borough. We are failing them in so many ways’.”
And the newspaper quoted Mayor Perry as admitting that, “The one thing we cannot do on our own and the strategy recognises is deal with the debt burden.”
Perry’s “plan”, such as it is, requires the passing of a council budget in the next few weeks which depends on another £38million borrowing – adding to that “debt burden” – in 2024-2025, and borrowing a further £38million in each of the next three years. Although that additional £114million of “debt burden” is nowhere to be seen in Tory Perry’s budget papers.
Read more: Gove’s extra cash barely touches the sides of Croydon’s debts
Read more: Perry pleads poverty when he has more Council Tax than ever
Read more: Perry struggles with numbers to offer us: Pay More, Get Less
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