CROYDON IN CRISIS: Saddled with £1.4bn of ‘toxic’ debt, Mayor Perry has been rendered paralysed in his management of the cash-strapped council’s finances. Ahead of tonight’s budget meeting, ANDREW PELLING outlines some of the options for the borough’s politicians
Betrayed: workers, residents associations and trades unions all say they were badly let down by Croydon Labour last year
There’s another protest expected outside the Town Hall tonight as Croydon’s Conservative Mayor, Jason Perry, proposes increasing Council Tax by almost 21% since his election in 2022. During that election campaign two years ago, Perry promised “to fix the finances”, but this latest tax hike is not the answer to the council’s problems.
And Perry and his right-hand man, Jason Cummings, know that. As does Jane West, the council’s director of finance. As does Tony McArdle, the £1,000 per day government-appointed chair of the “improvement” panel.
Another Council Tax increase is not the fix to Croydon’s finances that Perry was promising the voters during the 2022 election.
The reality is that Croydon’s £1.4billion debt burden is unsustainable now that interest rates are relatively high. Selling the council’s assets will cover day-to-day spending for a while, but in the end, as Mayor Perry admitted at his Sanderstead Mayor’s Question Time last night, the figures just don’t add up.
So the residents of Croydon will face even more cuts, year after year, and even higher debts, and ever more interest to be paid.
That’s not to say that the council can’t be more dynamic in solving its budget challenges. It just can’t wait around for the next bailout.
Councillors of all colours should tell the government to get on with finding a solution, likely a debt rescheduling rather than the debt forgiveness that Perry, Cummings, West and McArdle have been lobbying for since together they issued the council’s third Section 114 notice in November 2022.
But it looks like the issue has been kicked into the long grass by Michael Gove and the Levelling Up department, leaving the mess for a new government to deal with.
This is where Labour and the other opposition councillors at Croydon Town Hall could use their 36 to 34 majority to force the issue.
This time last year, when residents’ association members and trade unionists, banners in hand, stood shoulder-to-shoulder outside Croydon Town Hall united in their opposition to Perry’s initial 15% Council Tax hike, it was the local Labour opposition group which managed to bring down more opprobrium upon themselves than fell upon the Tory Mayor.
That was an extraordinarily inept achievement, as Labour let down campaigners from the south and the north of the borough by promising to oppose the Council Tax increase, only then to abstain, letting the increase – and the accompanying Tory benefit cuts – go through.
Labour lies: councillor Amy Foster, who works as an aide to MP Sarah Jones, with the leaflet making Council Tax false claims
Labour think, mistakenly, that the Croydon public will have forgotten such a betrayal. They’ve even started putting out leaflets with false claims saying that they have opposed Council Tax increases. Or what most genuine people would describe as “a lie”.
Labour in Croydon has a very long road to travel to recover their reputation after bankrupting the borough in an environment of corrupted governance.
Last year’s Council Tax abstentions did nothing to rebuild trust with their own party members and trades unions, never mind the general public.
Now, they have a second chance. The opposition parties in Croydon have a rare chance to ace down the national government by saying that it is irresponsible to vote for what are not sustainable, balanced budgets and that this matter needs addressing now.
Labour and the Greens and LibDem could vote against the budget tonight and then again next week.
But instead of dealing with the elephant in the room, the massive debt they left behind, Labour are just playing political parlour games by proposing cuts to Tory councillor wages.
This is not a vision for Croydon. Nor is it an alternative budget detailing how they would run the town’s affairs differently.
This year, unlike 2023, they have actually gone to the trouble of putting up an amendment to Jason Cummings’ budget.
Labour propose cutting Conservative councillors’ pay by £150,000, while keeping their own pay unchanged. If proportionate cuts were made in Labour’s allowances, they would be giving up £42,000. But they have made no grand gesture to give up such allowances, opening themselves up, once again, to justifiable accusations of rank hypocrisy.
Labour would also cut £70,000 of spending on Mayor Perry’s Question Time tour of the borough.
And as if to underline how Labour can’t control themselves when it comes to spending, they suggest eight ways of spending the £220,000 of savings that they propose… to the total of £900,000!
Labour’s case for cuts in councillor allowances is a sound one, as I wrote on these pages six months ago.
Axe man: Jason Cummings is proposing more cuts, just not to his own allowances
Labour now say that as the Mayor has not devolved any power to his cabinet, leaving the cabinet with little real work to do, those cabinet councillors should be paid £25,999 a year each instead of £39,195. Deputy cabinet members, with even less work to do, should have their pay reduced from £17,183 to the basic back bench councillor annual allowance of £11,692.
A minority of the eight councillors in Perry’s cabinet do work full-time on their council roles, so such a steep cut seems harsh. Reducing the number of cabinet members would be a more constructive approach.
The council’s two Green councillors are proposing the same 50% cut in cabinet salaries as Labour. Except they say that Labour should take the same haircut for their opposition spokespersons, too (the sole Liberal Democrat councillor is not allowed to propose budget changes; according to rules cobbled together by the Tories and Labour, one councillor does not constitute a Town Hall political “group”, while two councillors do).
Brave move: Green councillors Ria Patel and Esther Sutton (right)
The Greens have also raised the issue of pay for the council’s most senior staff, seeking a “Fairer Salaries” review on how to reduce the number of officials on very high levels of pay.
This is a brave move by council rookies Esther Sutton and Ria Patel in an organisation that has long been “officer-led” and has a reputation for dealing out retribution to any elected representatives who dare challenge that status quo.
It says everything about the priorities of Croydon Council under chief executive Katherine Kerswell that on tonight’s agenda, before the debate is due to take place on the annual budget, it is the CEO and her officials’ pay, and the allowances paid to councillors, that is to be considered first.
Before a spring pay award, there are five grades of Director and Corporate Director officer pay at more than £100,000 a year, running from £101,778 to £160,147 per year, before adding very generous pension contribution rates at 23.2%.
A bit like the Oakland A’s in Moneyball, the council needs to recognise its parlous financial position and stop recruiting officers on star wages and instead look at recruiting those on lower salaries seeking to make their name in a challenging environment. Just getting “on base” more often would be a start for failing Croydon Council.
But the council needs to do far more to get its finances sorted.
As happened every Friday morning up to the 1990s, senior councillors should be reviewing every item of spend and no contracts should be issued without the sign-off of those who represent us, the residents.
Extravagant spending: Mayor Perry has failed to fix the finances
Some extravagant spends were exposed and halted by that finance sub-committee. Devolution of spending control to communities on a pilot basis could also save money, as residents have a better understanding of value for the money.
Croydon’s planning department needs reforming to improve upon the slow rate of dealing with applications, and so increase council income from a growing local economy. More planners are needed and this, I am afraid, is an extra spend.
But there are recruitments that are unnecessary. There are recent examples in areas which are not a vital spend area, including for officials who are good at “storytelling” to housing tenants and for internal communications. Cabinet councillors enjoy “cabinet support officer” backing. These councillors should be able to manage their own diaries.
In the main, asset sales are progressing far too slowly. This has a really adverse impact on reducing the costs of servicing the council’s debts.
But there was a clue given by Mayor Perry last night that he might not have to resort to the £38million capitalisation direction – a form of borrowing – as laid out in his 2024-2025 budget. Perry told his Sanderstead Mayor’s Question Time that asset sales might excuse him from the need for that £38million in the coming year, which was supposed to be used to pay off loan interest.
But Perry and Cummings have £38million capitalisation arrangements planned for 2025-2026 through to 2027-2028, just to pretend that the budgets will be “balanced”, and as the Mayor said last night, Croydon will soon be left with little or no assets to sell. And so the council debt will grow and become ever more unsustainable, with everyday spending on essential council services just paid for out of yet more debt.
For the moment though it looks like tonight will be another chapter in Croydon residents paying more to get less.
Sheer demographic growth (there are more people living in the borough), and concessionary fare costs noted in the budget with large extra cost lines are big headwinds for the council. It’s a grim budget, with road repairs delayed and “demand management” to try to deny residents the housing support or social care to which they are often legally entitled. A change to children’s services to be through “hub delivery” is something that the council hopes will be more cost-effective.
After last year’s 15% Council Tax hike, Croydon residents face many years of thin gruel in return for the second-highest Council Tax in Greater London.
You can’t just wait around for the government to bail Croydon out.
Read more: Perry pleads poverty when he has more Council Tax than ever
Read more: Town Hall staff braced for £31m more cuts and job losses
Read more: Perry says there’s no alternative to his budget. But there’s lots
Andrew Pelling, right, was a Labour councillor from 2014 to 2022, when he was expelled from the party after opposing cuts in benefits. He has previously been a Croydon councillor, London Assembly Member and MP for the Conservatives
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ROTTEN BOROUGH AWARDS: In January 2024, Croydon was named among the country’s rottenest boroughs for a SEVENTH successive year in the annual round-up of civic cock-ups in Private Eye magazine
Andrew Pelling’s expertise on these matters is sorely missed on the Council. Andrew was a Labour councillor for Waddon, but was prevented from standing again in 2022 by the Labour establishment locally and in London Region. By purging independent minded members, who are prepared to challenge when things are going wrong, Labour is doing itself no favours in the long run.
“Labour is doing itself no favours in the long run”.
Oh but it has David. A Pol Pot style purge of the Labour party intelligentsia is a way of keeping the thickos in line, which includes us if they get back into power.
Whether it’s the genocide in Gaza, the Tories’ Islamophobia or local government’s financial crisis, Labour’s leadership is firmly stuck on the fence it has straddled since Starmer took over.
While Lee Anderson and Suella Braverman spout lies and hate and get away with it, Starmer’s timid appeasers are too scared to say or do anything for fear of offending someone somewhere.
In the run up to the Mayor of London, London Assembly and General Elections, you’d expect Labour to firmly set out its stall to attract the voters. Instead, all we get are platitudes, pitiful point-scoring, Tory-lite promises and threats of continued austerity.
And we know what they do to people in their own ranks who don’t agree.
In Croydon Town Hall, the real opposition to the Conservatives isn’t Labour but two Greens and one LibDem. Outside it’s Inside Croydon and its various contributors.
You can’t polish a turd, but you can put a red rosette on it and ask people to vote for it
Out of curiosity, who exactly does Croydon owe that debt to and what exactly would be the consequences if it was defaulted to prioritise for services? People pay their council tax in theory to get services in return, not to pay for the past incompetence of individuals who still haven’t been held accountable. As Andrew Pelling says, at some point the Council will run out of things to sell to keep up with debt repayments, then what? It’s clear we need some bold action from Central Government and this government isn’t going to provide any.
Most of the debt will be with the government’s Public Works Loans Board. There was a loan from the European Investment Bank. Councils lend balances to each other over short term periods.
Mayor Perry has absolutely failed us all.
Residents accepted the outrageous 15% hike last year, due to the false hope given by his debt write off from government.
The fact they’re suggesting another 4.99% rise and are basically admitting that we’re getting nothing from Government, is an absolute disgrace and I hope the Mayor is embarrassed by saddling us all with extra costs for absolutely nothing in return.
As Andrew says below its PWLB. What is not mentioned is that there is no way to default on this as such. The default spend control is now via McArdle.
The majority of money comes from Central Government as does the duties that funding is there for. Central Governemtn money as usual does not match need/demand, not jsut here but most of the Country.
You have a say by electing your representative to the Council and they use their position to determine priorities in that budget at Budget setting time.
But in this situation they are unable to really determine anything as they can be overruled by The Commission who will state the debt and ringfenced services come first.
What would be nice is for all revenue generated within the Borough by taxation. fines and revenue derived from local assets and assets in trust or bequeathed is also ringfenced and only spent on areas residents via elected Councillors feel are their priorities and seperate from Central Governments devolved statutory duties.
I am sure Andrew or any politician will give the political reality of financing and services. But ask the question does that convoluted financing model for local goernemnt actualy deliver what it is and was supposed to do or are we just being fed smoke and mirrors?
I do not claim to be any kind of guru on this shambles or even politic’s, being what I would term a naive political novice.
But this long running opaque SNAFU has a strong whiff about it and not because of any water company effulent discharge!
The council is a bunch of bottle jobs if they give us a 4.99% tax increase on top of the 15% last year.
We’re already bankrupt – what’s the point of charging residents extra to pay interest off a debt burden which is already unsustainable? It’s an absolute disgrace that this is even considered.
With no deal from central government, they should stand up for their constituents and refuse to charge more. Totally wishful thinking I know, Tories will vote for it, Labour will pretend to vote against it and then cave in because they’ve got no spine.
Bring back Andrew Pelling. I wanted him for Exec Mayor for loads of reasons including his expertise – one being that he would rise above the pathetic politicking that got us in this mess.