CROYDON IN CRISIS: According to official figures, even with a £38m government bail-out, the Conservative-run council looks like spending £42m over budget in this financial year – and that’s £10m more than when it first went bust in 2020. EXCLUSIVE by STEVEN DOWNES
Big helping: Mayor Jason Perry may soon be asking for a bigger slice of government funding
Jason Perry, the Conservative Mayor who was elected on promises to “fix the finances” and “balance the budget”, is presiding over a forecast £24million overspend on the council’s budget in this financial year.
And that’s a £24million overspend even after getting a £38million government bail-out (alright, pedants, a “capitalisation direction”), as well as after using £5million from a contingency fund and £13million from the council’s reserves.
“Perry’s deep in the doo-doo,” according to one seen-it-all-before Katharine Street source.
“This is Section 114 territory … it’ll be our fourth in four years.”
Another veteran Town Hall figure told Inside Croydon: “There’s no way they can pull back from that now.”
The figures all come from the council’s own financial performance report ahead of next week’s scrutiny committee meeting, and cover “Period 3” of the 2024-2025 financial year, up to June.
The report is written by Jane West, the council’s finance chief (alright… “corporate director of resources”), and her deputy, Allister Bannin.
Report author: council finance director Jane West
It states, “The general fund revenue budget outturn is forecast to overspend at financial year end by £23.9m[illion] at Period 3, after the budgeted utilisation of £38m[illion] capitalisation directions requested from the Ministry of Housing, Communities and Local Government (MHCLG), utilisation of the £5.0m[illion] risk contingency budget and utilisation of £13.0m[illion] corporate earmarked reserves.”
Put together, that represents an even bigger black hole in the cash-strapped council’s finances than in November 2020, when officials were forced to issue Croydon’s first S114 notice – effective admission that they could not balance the authority’s books. Four years ago, after all the demands of the covid lockdown, and Colm Lacey playing fast and loose with the financials at Brick by Brick, Croydon found itself £32million short of a balanced budget.
This time round, even with the “help”, “advice” and “oversight” of the government-appointed “improvement and assurance panel”, the council’s position looks far worse.
The report was released yesterday, possibly under the cover of the equally appallingly bad news of the closure of four of the borough’s public libraries (predicted saving: a mere £500,000 per year). The council’s propaganda department has yet to issue any upbeat, look-on-the-bright-side press release about the Town Hall’s catastrophic finances, however.
The report states: “All service directorates have been asked to reduce their net expenditure so that the annual budget can be balanced at the end of the year.
“It should not be underestimated what a challenge this will be against the background of increased demand pressures which are continuing to build across local government and increased market prices…
“However, the council will still strive to bring its 2024-[20]25 budget into balance including through the in-year Financial Recovery Plan.”
In the red, in black and white: Jason Perry’s council’s figures in the latest report show that they have lost control of spending
This week, the local council workers’ union Unison predicted that across London local authorities will fall £650million short of the money they require for the next financial year, leaving them “on a precipice”.
“Council funding is in a dire state with massive cuts likely to essential services and jobs,” the union said in a special report, Councils On The Brink, in which they predict “the widespread collapse of local government”.
Unison said: “Local authorities in London could be forced to sell land, buildings and other capital assets, as well as cut back vital community services like rubbish collection and recycling, libraries, public toilets and leisure centres even further.”
Although here in Croydon, four years since the first S114 and after 15 years of Tory-imposed austerity, most of the assets have already been flogged off, hundreds of jobs have already been axed, the libraries are being closed, and there’s precious few services left to cut.
Unison predicts that in 2025-2026, Croydon’s shortfall will be £53million, the biggest of all London councils, ahead of Barnet (£47.8million), Camden (£37.5million), Newham (£33million) and Islington (£31.1million).
Croydon Council’s latest draft report effectively admits, as Inside Croydon reported earlier this year, that Mayor Perry’s budget was not a balanced budget – but needed the £38million from government, as well as Council Tax hikes of 21% in 12 months.
“The 2024-[20]25 budget approved by council in March 2024 set a net revenue budget of £361.3m[illion]. This required capitalisation directions from government of £38million to balance, owing to resolving historical inaccurate accounting treatments and to fund the ongoing annual cost of servicing the disproportionate level of debt.
“The council’s historic legacy borrowing and debt burden continues to be critical to the non-sustainability of the council’s revenue budget, with circa £66m[illion] annual cost for the council to service the debt.” This puts the cost of servicing Croydon’s debts – repayments and interest – at 16% of the council’s spending power, around double the amount of most English authorities.
Details of despair: page after page of the financial report show that the council is unable to manage demand for services, especially housing, children’s services and SEND transport
According to the report, “Dialogue with MHCLG [the local government department] continues around options of further financial support from government in regard to its level of structural indebtedness to ensure it can deliver sustainable local government services.”
Increasingly, the crisis in local government finance is not a party political matter – just one of ever-increasing demand for key services by some of society’s most vulnerable, without the government putting up the money to provide those legally-required services.
The Croydon report predicts an overspend of 18% on the children’s social care budget. The report suggests a £87.3million children’s social care spend this financial year, when the budget is £74million.
“Croydon is experiencing an increase in demand for children’s social care services which is also being experienced nationally and regionally,” they say. Between April 2023 and 2024, the council says it encountered a 24.1% increase in cases – an additional 900 children to be looked after.
“In response to this increased demand, two short-term teams have been set up to ensure that statutory safeguarding responsibilities are met, social worker caseloads are maintained at a safe level in the short-term and to support efforts to reduce longer-term caseloads and downstream placement costs.” Ahhh… those downstream placement costs.
Provision for SEND, special educational needs, transport looks to be up by 7.6%: £61.1million, £4.3million more than was budgeted.
The report also admits that Mayor Perry playing politics with the borough’s budgets over the election period will have cost the council almost £1million. Implementing new parking charges and regime was delayed by the council, in an effort not to piss off too many voters from supporting Tory MP Chris Philp in July’s General Election.
The report says: “Forecast £0.9m[illion] income pressure in parking enforcement owing to delay in implementing the new parking policy caused by the pre-election periods.” Perhaps the £900,000 ought to go on Philp’s election expenses?
Temporary accommodation: even with office-to-flat conversions such as Windsor House, Croydon is facing steepling increases in housing costs
And the council reports a 66% overspend on housing.
“The housing directorate has a… overspend of £15.7m[illion] (65.9%) against the budget of £23.8m[illion] owing to the demand pressures within temporary accommodation.” The report suggests an increase in demand from homeless people of 50 “units” per month. “The pressure is being experienced nationally and regionally,” they say.
The report is not all bad news. There’s been a £200,000 underspend on the borough’s libraries while the service is under “redesign”, they say, councilspeak for running the libraries down before closing four of them.
And there’s a similar saving from reducing the spend on external lawyers – though for those who have any dealings with the council’s in-house legal team, this might only result in greater costs over other, ill-advised cases and poor planning decisions.
In the meantime, council CEO Katherine Kerswell is spending millions of your money (at least £5million) on three separate teams of consultants, drafted in to advise on how to… errr… cut costs.
In an internal memo to council staff, Kerswell opted to blame “external pressures” for her and the council’s Tory leadership failing in much the same way that Negrini and the previous Labour leadership failed.
“We knew this was going to be a difficult year, with tighter budgets, but our current figures are not where we want to be and our latest budget reports for period three show that we are forecasting an overspend,” Kerswell simpered.
“We’ve done so much to get control of our finances and deal with Croydon’s own issues and debt burden – but the reality is we are now facing mounting pressures from the outside world.” So nuffink to do with £192,000 per year Kerswell and her expanded corporate management team then.
A senior Town Hall source, on condition of anonymity, told Inside Croydon: “The overspends come from three areas: SEND transport, temporary accommodation and children’s placements. All are statutory requirements that we do them.
“They are external demand-led. They have emerged over the period February to now and are full-year predictions.” Yes: “emerged”.
“Pretty much every London borough has the same.
“Unless the government helps, it means more cuts to everything else to balance.”
So, it looks like that fourth Section 114 can’t be very far away then…
Read more: It’s time for our elected councillors to stand up for Croydon
Read more: You can depend on Croydon Labour: they always let you down
Read more: Perry pleads poverty when he has more Council Tax than ever
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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
Don’t worry. Perry will still continue to blame the last administration as he always does. Nothing to do with me Guv again.
If ALL/almost all local authorities are in danger of bankruptcy, perhaps the only positive sign from all this council funding crisis stuff is it means that the overpaid Local Government Gravy Train (LGGT) passengers can’t just move on to another council (victim)?
Another positive sign is that we may be approaching a local government “reset”, whereby the game is over for the LGGT and local authorities will have to be re-established and cut the pay of the useless “senior staff” !?!
The Council has more Labour councillors than Tory, am I missing something?
Yes.
When the electorate elected a Tory Mayor, they got a Tory administration.
Do try to keep up.
Dear Normally Punctilious Editor,
I am afraid to say there is an uncharacteristic mistaike in your headline!
You wrote:
“Mayor Perry busts his unbalanced budget with £42m overspend.” when my journalistic instinct tells me you actually meant to write:
“Unbalanced Mayor Perry busts his budget with £42m overspend” which would have been more accurate, both selectively and overall.
But it busts the line, Arno
Arno, this is a term from the days of old-fashioned hot metal typesetting when headlines couldn’t be kerned or compressed. When they turned over to a second line we called it ‘bust’. I’m guessing you’re a Milennial
b 1934…..what does that make me?
Older but wiser
But didn’t I just read an article about the recruitment of a proposed new Housing Director that quoted the Council as saying that they “now have the financial stability and capacity”.
Someone is being less than honest with potential candidates and the public as a whole.
You did.
They’re just delusional.
Funny have overspent yet I applied for DHP as struggling to pay my rent told they can’t afford to help people with DHP as LImited Money doesn’t seem it
This is why Jason is so keen to close down our libraries – he want to sell them off to developers so he can use the money to fill this massive hole in his budget.
When the Greens proposed cutting back Councillors’ special allowances and reviewing the salaries of the overpaid senior staff – the Conservatives all voted against it and Labour refused to support it.
That on its own wouldn’t have fixed all of the financial problems the Conservatives and Labour have created but it shows that when it comes down to it they will raise Council Tax by over 20% in two years and cut services for all of us but they wont cut the money going into their own pockets
When will people realise! No politician supports the ordinary man on the street anymore, wherever you live. A career in politics is just that. The penultimate prize is to ensure that your pockets remain well lined and that that you will be able to retire comfortably and with years ahead to enjoy that retirement. And that common sense isn’t a prerequisite for the job