CROYDON IN CRISIS: Elected Mayor didn’t hang around to face the music from councillors as the £42m overspend was discussed at the Town Hall this week. By STEVEN DOWNES
In the hot seats: Cllr Jason Cummings alongside council director Jane West, explaining to the scrutiny committee how very bad things have become
The council’s projected £42million overspend this financial year is “unprecedented”, and senior council executives and Tory councillors are “disappointed” and extremely concerned that Croydon could be heading for financial rocks yet again.
Inside Croydon reported earlier this month how figures for the first three months of this financial year – through to June – forecast a £24million overspend after getting a £38million “capitalisation direction” from government, as well as after using £5million from a contingency fund and £13million from the council’s reserves.
The figures all come from the council’s own financial performance report, written by Jane West, the council’s “corporate director of resources”, who faced a scrutiny committee of councillors this week and admitted that she and her staff had not predicted the increase in demand for housing, children’s social care and SEND transport that has stoked the council’s spending so steeply, so quickly this year.
According to West, London Councils, the umbrella organisation of local authorities in the capital, is predicting a £600million overspend in total across all 32 boroughs and the City of London. Even neighbouring Bromley are heading for an overspend of £18million.
It was West who described Croydon’s current position as “unprecedented”.
Although the executive Mayor, Jason Perry, had been present at the scrutiny committee for the first two-and-a-half hours, to discuss his cuts to the borough’s library service and the closure of four public libraries, he did not stick around to face the music on the budget-busting spending. It is not the first time this has happened.
Perhaps the Mayor elected on a promise to “fix the finances” did not think it important enough…
Jason Cummings, Perry’s cabinet member for finance, painted a very bleak position in his boss’s absence.
“It’s extremely disappointing and very worrying,” Cummings told the meeting in the Town Hall Chamber, with a typical frankness that is rarely found among senior local politicians.
Cummings explained that there had been a “significant increase in demand” for many services that the council, by law, has to provide – including housing the homeless and caring for vulnerable children – since February, when he and West were putting the finishing touches to the 2024-2025 budget.
“It is not something we predicted,” Cummings said. Highlighting that this wave of additional spending has occurred across all London, Cummings said: “We got it wrong. But so did everyone else.
“It is real, and we have to deal with it.
“The council is effectively having to rethink everything it is doing in order to mitigate this,” Cummings told the scrutiny committee, chaired now, following the resignation of Rowenna Davis, by Leila Ben-Hassel, the Labour councillor for Norbury and Pollards Hill.
West told the meeting that she was seeking £3million in-budget cuts from every department across the council, not just those with the overspends, meaning more redundancies and fewer services across the board.
“Our current reserve position and our ability to stop things has pretty much been exhausted over recent years,” Cummings told the committee. The latest overspend figures are after £13million of reserves have already been used.
“We are in a very difficult position,” Cummings said.
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
In the finance report, which will be discussed at next week’s cabinet meeting (when Mayor Perry will have to attend, but won’t, again, be subjected to any questioning), 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.
A S114 Notice is effective admission by a local authority that they can not balance the books. In 2020, Croydon became only the second council this century to issue a S114 Notice, although since then, another seven councils have issued S114s.
No other council, apart from Croydon, has issued three S114s. No council has ever had to issue four S114s. Well, not yet, anyway.
The report states: “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…
Unprecedented: no other council has ever issued three S114s. None has ever gone for four S114s
“However, the council will still strive to bring its 2024-[20]25 budget into balance including through the in-year Financial Recovery Plan.”
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.”
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. Next week’s staff-wide webinar to discuss the work of these pricey consultants should be a real doozy.
“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,” Kerswell, the council’s £192,000 chief exec who has been in post since before Croydon issued its first S114, has told staff.
The scrutiny committee expressed some disquiet that figures for May and June, especially such shockingly bad figures, had only been brought before them now – and that there had been no mention of this latest financial collapse at meetings of full council, the cabinet and scrutiny which had all been held since the General Election in early July.
Nothing that West or Cummings said provided any assurance to the cross-party scrutiny committee that the overspend could be clawed back before the financial year-end. They have asked to have figures for Periods 4 and 5 – July and August – presented as soon as possible for further checks.
Read more: Mayor Perry busts his unbalanced budget with £42m overspend
Read more: It’s time for our elected councillors to stand up for Croydon
Read more: Perry pleads poverty when he has more Council Tax than ever
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at inside.croydon@btinternet.com
As featured on Google News Showcase
- Our comments section on every report provides all readers with an immediate “right of reply” on all our content. Our comments policy can be read by clicking here
Inside Croydon is a member of the Independent Community News Network
- Inside Croydon works together with the Bureau of Investigative Journalism, as well as BBC London News and ITV London
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
Why doesn’t cost cutting at Croydon Council extend to the useless and overpaid directors? Surely, only solvent and well-run councils can afford to pay six-figure salaries to any staff, and the hapless gaggle at Croydon should be on minimum wage, and only get a payrise to London Living Wage, once they have recovered the council finances, which they and their predecessors as Local Government Gravy Train passengers screwed up?
Out of interest, what has happened to the £38m alleged to have been achieved in the sale of the Red Clover Gardens estate?
Mysterious investors, including Regen Capital were reported to
have completed the deal in May 2024.
Coincidentally £38m is the reported overspend in this report 🤔
Couldn’t Perry hang around to blame the last administration for the next oncoming S114 or is he facing up to the fact that the excuses are now wearing far too thin and he will have to finally take responsibility for the continuing decline that has happened on his watch.
Now we can add “ducking and diving” to the epithets used to describe part-time, piss-poor, porky pies Perry, who sent in Cummings as a sacrificial lamb rather than face up to his own failings
Cummings was always going to be there.
But for neither the Mayor, nor the CEO, to attend or contribute to such an important discussion – scrutiny is about accountability after all – seems slack at least.
OK. Replace “ducking and diving” with “slopey-shouldered”
There is a difference from the previous Labour council bankruptcy.
It seems that the council is being open about its problems.
The Labour council was not open about its financial mismanagement and pretended for a while that COVID-19 was the cause.
Mayor Jason Perry has answered exactly the same number of questions about the council’s financial position in 2024 as Tony Newman, then council leader, did in 2020: ZERO.
And Katherine Kerswell, the council’s chief executive, has answered precisely the same number of questions about her management of the council’s finances as her predecessor, Jo “Negreedy” Negrini, did before her abrupt, and lucrative, departure in 2020: ZERO.
Let’s not deceive our readers that our local politicians are running our local authority. They are not. The bureaucrats in Fisher’s Folly, some of them on very generous salaries, continue to avoid all accountability.
Kerswell went to ground years ago. She’s not stupid. Just serving out her time till retirement. She has no answers or solutions to Croydon’s dire financial position so just keeps the remaining staff happy and motivated by writing internal blogs and getting involved with corporate structure and diversity targets.
Diversity should always be tghe top priority for a caring, effective local authority
The top priority for Croydon now is to balance the books and clear the debt. Diversity is a very low priority until that is achieved.
Balancing the books and clearing the debt is not going to happen Graham. But it gives a good excuse for the Tories (whether Thatcherite blue or Starmerist red) or to launch a war on minority groups
‘Minority groups’? Who are they? I’d say the majority of Croydonians are being hit
More excuses, more public buildings sold, more vital work left undone, more blaming someone else, more spent on consultants, more incompetence and more incompetents.
Cuts to budgets, cuts to staff, cuts to services, cuts to vital support, cuts to accountability, cuts to credibility, cuts to any investment in making Croydon any better in future.
No change in Mayor, no change in Chief Executive, no change in Conservative or Labour cabinet or shadow cabinet, no change in the ridiculously high salaries they pay themselves for being useless.
Hardworking Council staff ignored, sensible Councillors ignored, volunteers keeping lots of our services going ignored, people in need ignored, press and public questions ignored, appeals to central Government for fair funding for Croydon ignored, demands for a change to the whole system to fix all of these problems – ignored
I’m sure we were told it was £12 mill for the 3 consulting companies but perhaps I have my figures wrong. Either way how can you cut essential services to the bone and then act surprised when you overspend in those services… I genuinely can’t see a way out of this mess and feel for anyone who relies on any council services for the next five, ten, maybe fifteen or more years.