Dear Angela,
Across the country, councils are in financial crisis. This is due in large part to the huge budget cuts that have been imposed on councils by successive Conservative governments. In part, too, it has been exacerbated by local failures, by increasing service demand and here, in Croydon, by long-term structural underfunding.
Time for action: Angela Rayner has inherited huge problems in local government from the Tories
In 2022-2023, government funding to Croydon Council was worth £239.25 per resident. Neighbouring Lambeth gets £481.73 for each of their residents. Ask your cabinet colleague Steve Reed – he now represents a constituency that straddles both boroughs.
This inequality in funding has been the case for years. If Croydon got the same funding as Lambeth per resident, we’d have an extra £95million to spend every year – more than enough to balance the books.
But so far for Croydon, the only solution offered has been repeated “capitalisation directions”. These are neither loans nor bailouts, but in essence a demand from government for the council to try to balance the books by selling off local assets – libraries, nurseries, land, buildings that house local voluntary sector organisations, and so on.
This is the epitome of the kind of “sticking plaster politics” that the Prime Minister has railed against. In essence, you can only pay your rent by selling off the furniture for a short time.
Alongside these sell-offs, which have failed to balance Croydon’s books, there have been huge cuts to our public services. We have suffered above-inflation hikes in Council Tax, while statutory services like social care have had their budgets slashed.
You know the consequences of these sort of cuts. They don’t balance the books, they impose larger costs on the NHS and on the social security system. Penny-pinching cuts often cost more in the long run.
There is a shortage of care workers across the country, and the visa restrictions brought in by the last government have reduced the number of overseas workers coming into the sector – leading to more shortages and putting more elderly and disabled residents at risk of neglect. Please speak to your ministerial colleagues in the Home Office to reverse this counterproductive policy.
Alongside the service cuts to care, our struggling children’s services and other areas, there has been the closure of vital local services (half of the borough’s public libraries are set to be downgraded, with four earmarked for closure) and many local voluntary sector organisations that provided a lifeline to those hit hardest by austerity have been defunded.
As you well know, once these public institutions are sold off or closed, they will be lost forever, with no hope of ever replacing them – and our communities less well-served forever.
‘The situation is untenable’: simply providing bail-outs and ‘capitalisation directions’ to councils like Croydon is not fixing the underfunding issues
With each job lost at the council, we are losing experienced, knowledgeable staff – and making the council ever less capable of delivering the “Change” Labour promised in its election manifesto.
The situation is untenable.
You know it. I know it. Every councillor and senior official of Croydon Council knows it, too, as do the members of the government-appointed “improvement” panel, and as should, by now, every official in your Department for Housing, Communities and Local Government.
Hiking Council Tax is not a solution either. Since 2023, Council Tax in Croydon has gone up by 21%. We are paying more to get less – and it puts a disproportionate burden on less wealthy households.
As you will be well aware, Council Tax is a regressive tax, with Band H properties only paying around three times as much as the average Band A property. Those on the highest incomes are often earning far more than three times that of those on the lowest wages.
In Croydon, many care workers’ income is at, or just above, the minimum wage of around £22,000 a year, while the council’s chief executive is paid around £200,000 a year – more than the Prime Minister and 10 times what a care worker actually earns. That salary is about 18 times more than many pensioners receive, and they will be losing their Winter Fuel Payment this year.
Under-paid: care workers in Croydon receive around 1/10th of what the council’s CEO is paid
Since Council Tax benefit was abolished, councils with smaller budgets have had to fund their own “Council Tax support” schemes. Any above-inflation increase in Council Tax hits some of the poorest people hardest.
As is the situation across the country, throughout our borough more people than ever are reliant on food banks, thanks to the removal of the welfare safety net at both local and national level.
So our council struggles to deliver basic services. The borough’s residents do not have the capacity to pay ever higher Council Tax. And the borough has few remaining assets to be stripped to fund day-to-day services. The only sensible solution is for this government to do what the last government failed to do: fund Croydon fairly.
While a bailout would be nice, or having some of the debt written off desirable, actually just simply funding us on anything like the same basis as neighbouring Lambeth would be fine.
I understand your deputy Jim McMahon might meet with our no-longer-executive Mayor Jason Perry, after he has met with the laughably titled “improvement and assurance panel”. Let me assure you that any improvements that this panel has provided have yet to be noticed by Croydon residents, although they have trousered rather generous consultancy fees.
I do hope that as Deputy Prime Minister and Secretary of State, you will protect local government and ensure that a fair settlement is delivered for Croydon and all councils. You and all local councillors need to take a strong stand against another round of austerity – which will simply see more councils issuing Section 114 notices.
Let the promised “painful budget” this autumn be felt by corporate landlords, profiteering energy companies and banks, those who make their money from capital gains and those billionaires whose wealth has ballooned while living standards have fallen for the rest of us.
I hope that helps to clear up some important, vital points for the future of Croydon and many local authorities around the country,
Your sincerely,
Andrew
- From 2015 to 2019, Andrew Fisher was the Labour Party’s Director of Policy under Jeremy Corbyn. Fisher is also the author of The Failed Experiment – and how to build an economy that works, and now writes columns for InsideCroydon, the i newspaper and is a regular pundit on BBC and Sky News programmes
Andrew Fisher’s recent columns:
- Selling off borough’s public libraries is act of social vandalism
- A chill wind is blowing as Labour breaks pensioners’ pledge
- ‘Those are my principles, and if you don’t like them… well, I have others!’
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