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.
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
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