With bail-outs since 2021 of £417m, Croydon’s executive Mayor says that he cannot deliver ‘balanced’ budgets, as he asks the new government to do what his chums in the previous Conservative government refused to do: write off part of the brassic borough’s debts. By STEVEN DOWNES
Busted flush: the game’s up for part-time Mayor Jason Perry, who has admitted he can’t fix Croydon’s finances
Having spent the previous three months doing little more than campaigning for Tory vandal-enabler Susan Hall and damp squib Rishi Sunak, on Monday night Croydon’s part-time Mayor sat down to write his latest begging letter, this time to Labour’s new local government minister, Angela Rayner.
Between the time that piss-poor Jason Perry started writing “Dear Secretary of State”, and his signing off “yours desperately”, Keir Starmer’s new government had already erased the “levelling up” bit from Rayner’s departmental title, a legacy from the toxic Tory rule of Boris Johnson and Michael Gove, in which Croydon’s Conservative Mayor had placed so much trust.
“No more government by gimmick,” Rayner said. “No more stunts and spin,” said the Secretary of State for the re-titled Ministry of Housing, Communities and Local Government.
Croydon’s Perry, two years being elected on a promise that he’d “fix the finances”, now admitted in his letter his own and his Tory chums’ abject failure to deal with the financial problems facing this borough – problems facing local councils right across England after 14 years of Conservative misrule and imposed austerity.
Prime Minister Keir Starmer and Rayner have inherited a local government system with an estimated 200 English councils – almost two-thirds – in “significant financial trouble”, on the brink of going bust, and being forced to consider scaling back services, job cuts or flogging off assets.
The situation in Croydon is so dire that, even after Perry got Gove’s permission to hike Council Tax by 21% since 2023, not much has changed, apart from the fact that the cash-strapped council now has precious few assets left to sell.
In his letter to Rayner, Perry admits that Croydon’s 2024-2025 budget is not “balanced”, as is required, but has been shored up by another £38million capitalisation direction – or bail-out – from central government.
In charge: Angela Rayner, the new minister for local government, understands how councils work, according to Croydon’s Conservative Mayor Jason Perry
Perry began his letter to the new deputy prime minister in typical, Partridge-esque patronising style (“I appreciate that there are a range of issues to face as you take on this important office of state,” he grovelled), and wrote, “I am pleased that someone who understands local government has been appointed to this role.” Which sort of suggests Perry thinks that Gove and his various ministerial underlings did not.
“I am keen that you are informed about Croydon’s unique position,” Perry wrote, hoping to stick Croydon’s begging bowl in front of Rayner before the hundreds of other brassic boroughs.
Perry now admits that he can’t fix Croydon’s finances. “The historic financial problems that were uncovered [by the Mayor’s ‘Opening the Books’ exercise] have left the council with issues that are, despite our best efforts, insurmountable without a different approach to extraordinary government support,” Perry wrote.
Someone in Whitehall might want to brief Rayner that Croydon’s “historic financial problems” date back to at least 2010.
Appointed by Perry: Jo ‘Negreedy’ Negrini
That was when Jason Perry was the cabinet member responsible for development in the borough, who signed off on the £145million cost of the council’s office building (about three time what similar office blocks in London were costing at the time), ran CCURV, a loss-making (for the council) joint venture with developers John Laing (who did somewhat better out of the deal), oversaw the introduction to Croydon town centre of developers Westfield, and – seemingly at the Aussie company’s behest – appointed Aussie Jo Negrini to her first job in Croydon.
Of itself, that is some track record of failure.
And when his council leader Mike Fisher and Perry left Croydon Town Hall in 2014, the council already had a £800million mountain of debt. An “historic financial problem”.
In his letter to Rayner, Perry writes, “We have stabilised Croydon’s financial position and are making significant progress on my aim to get Croydon back on track.
Debt burden: Perry signed off on Fisher’s Folly, which cost three times more to build than similar office blocks
“We are one of only three London boroughs to deliver a balanced budget this year, albeit with a capitalisation direction in place.” Yep, that’s the “balanced budget” that needs a £38million bail-out. And a “balanced” budget that will need another £38million bail-out next year, too.
Even Perry is forced to admit that this continuing practice of annual bail-outs is not sustainable, for anyone.
“… Croydon Council still has a £1.6billion debt burden, which costs some £62million per year to service.
“Whilst we have put in place a range of measures to stabilise our position, including selling our assets and transforming our service delivery, this represents 17% of the council’s core spending power.
“The scale of this unprecedented debt means that we are simply unable to deliver a wholly balanced budget, without that different approach to extraordinary financial support from the government.” Those are our italics, to highlight Perry’s admission of failure.
Perry lays out the gob-smacking levels of addition finance that has been chucked Croydon’s way since November 2020, when the then failed Labour administration first sounded the alarm over the council’s effective bankruptcy.
£417million
That’s the total amount of capitalisation directions received by Croydon since 2021, including the latest, approved, £38million for this year under Perry.
“This cannot continue in the longer term,” Perry writes.
“We want to work with you to secure our ongoing financial sustainability, in order to deliver for our residents and ensure that we can, in future, balance our budgets without recourse to government,” he added, although actually, an annual (or longer-term) settlement from government that properly reflects the borough’s needs (rather than tries to pretend they do not exist, as occurred under the Tories) remains essential.
Referring to Gove’s “improvement” panel – which appears to have done very little, apart from improve the panel members’ bank balances, all paid for by long-suffering Croydon residents – Perry writes that “the panel supports our analysis of the issues at hand and our approach to tackling them”.
Begging letter: Mayor Perry’s appeal to Angela Rayner, in which he admits he can’t fix Croydon’s finances without a massive debt write-off
That “approach” is the need for at least £500million of debt write-offs. It would be the first, and much the largest, debt write-off in the history of local government in Britain (at least until a similar settlement is sorted for other troubled councils, such as Birmingham or Thurrock).
Most of Croydon’s debts are owed to the Treasury, through loans taken out with the Public Works Loans Board (when “Bad” Bobby Jenrick was the local government minister, he lumped an additional 1% on to the repayment interest, in some way to “punish” the Labour-run council that had crashed the finances, apparently oblivious to the fact that it is tens of thousands of ordinary residents who are left picking up the tab)..
In context, what Croydon is asking for, just to be able to reduce its debt repayment bill, is about 10% of the cost of the unusable PPE which the Tory government bought from their mates in 2021…
Perry asks for an urgent meeting with Rayner and new ministers, and has also appealed to the borough’s four MPs to lobby on behalf of Croydon – not that one of them, Tory Chris Philp, was all that successful when he was in the previous government’s cabinet.
Perry wrote: “I believe that Croydon now offers an example of how a local authority can rebuild after a financial and governance collapse, and can offer a way forward. Whilst we are working hard to fix our problems, we do need a new approach from the government to restore sustainable local government in Croydon.”
Either that, or the govrnment faces £40million annual bail-outs to Croydon in perpetuity, despite residents paying the second highest Council Tax levels in London.
Read more: £603,000: the soaring costs of Croydon’s ‘improvement’ panel
Read more: Council chief Kerswell has doubled up on £140,000+ executives
Read more: Cummings’ budget rejected before his big Newsnight moment
Read more: Perry pleads poverty when he has more Council Tax than ever
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