CROYDON IN CRISIS: More mega-millions borrowing, more maximum tax increases, but still no solution in sight for the borough’s residents, as officials pretend that they are running a balanced budget.
By STEVEN DOWNES
If proposals announced today go through (and they always do…), by April 2025, Council Tax in Croydon under Mayor Perry will have increased by 26.7% in just two years, while his council flounders under an unbalanced budget and a forecast overspend this year of £42million.
Perry’s council admitted this morning that he will be increasing Council Tax next April by 4.99% – the maximum allowed by law without a local referendum (now wouldn’t that be fun?) or some special dispensation from the government.
That compounds the 15% hike in 2023 and 5% increase on top of that last April, making Croydon residents among the most highly taxed by local authorities in the capital.
Money for nothing: Tory Mayor Jason Perry
For a “typical” Band D home in Croydon, the latest increase will see them paying an extra £82 in 2025-2026.
In 2022, before Perry was elected as Mayor, a Band D Croydon household was paying £1,384.36 for their council services (that is, not including the social care or Mayor of London precepts). Next April, the equivalent part of their Council Tax bill will be around £1,724.
Back in 2023, when Perry was conniving with then Tory government minister Michael Gove to hike Croydon’s Council Tax by 15%, his plan was to take political advantage by proposing no increase in Council Tax in April 2025 – one year out from the next local elections.
But the incompetence and failures of £82,000 per year Perry and senior council officials have seen the council’s finances get worse, instead of better, forcing them to concede that they will have to impose the next Council Tax increase while seeking their biggest government bail-out yet.
The discovery after just a couple of months of this financial year that council departments were overspending Perry’s “balanced” budget by £24million has forced senior officials to impose strict Section 114 restrictions on spending, without actually issuing a S114 notice.
Using reserves: finance director Jane West is applying S114 restrictions without issuing a S114 notice
A S114 notice, as iC’s loyal reader will now know only too well, is an effective admission that the council is broke and cannot balance its budget. Since November 2020, Croydon has issued three S114 notices, with Perry having run up the distress signal most recently in November 2022.
Perry and council directors are now trying to save face and pretend to Whitehall that they won’t be issuing a fourth S114.
Croydon’s latest multi-million overspend comes despite getting a £38million government capitalisation direction, while also using £5million from a contingency fund and £13million from the council’s reserves.
Jane West, the council’s corporate director for finance, told staff last month, “I cannot foresee having to issue a Section 114 notice.” West said that instead, she expects to use the last remaining council reserves – £27.5million – in an effort to balance the books.
In 2022, Perry and his cabinet member for finance, Jason Cummings, voted against the then Labour administration’s budget, which included additional money for the reserves – money which Perry is now proposing to use to dig himself out of this latest hole.
West revealed to council staff that she was implementing “Section 114 levels of control” on spending. For Perry, West and her boss, council CEO Katherine Kerswell, hopes are now being pinned on some kind of rescue package for Croydon and other struggling councils, possibly in the Chancellor’s Budget at the end of October.
“It’s unclear what the new government’s approach is,” West said a fortnight ago, as she admitted that the council will need yet more borrowing from government.
Without it, West said, it is “tricky to see how we can maintain services”.
Gonna need a bigger bail-out: council CEO Katherine Kerswell has presided over three S114 notices. So far
Kerswell said that Croydon “still has an issue about our debt with the government”. Croydon has debts of £1.4billion. Most of that is money owed to the government. Servicing that debt will cost the council £69million in the next financial year. Kerswell’s “plan” is to get the government to write off a chunk of the council’s debt.
Kerswell and Tory Perry had tried that approach in 2022, when the Conservatives were in government. They were snubbed.
Now, the narrative is that Croydon is not alone among the cash-strapped councils, and that demands for housing, adult social care provision and children’s services – all services that councils are obliged to provide by law – are far out-stripping many council’s threadbare resources.
West said, “We hope there will be a sector-wide solution.”
Perry goes cap in hand
The national government annually imposes a cap on increases to Council Tax, in recent years set at 4.99%. Local authorities are not allowed to increase Council Tax by more than that. This morning, in a release from the council’s propaganda bunker in Fisher’s Folly, they said: “The Executive Mayor of Croydon has pledged not to increase Council Tax above the cap.”
So now Perry is promising not to do what he is not allowed to do by law. Round of applause for that man!
And having already begged for government bail-outs amounting to £76million since 2022, it looks like Perry is going to have his begging bowl out again this winter: “The extent of the challenge means that in 2025-2026, Croydon will continue to need support from the government.”
The bail-outs he’s been granted these past two years – £38million in 2023 and 2024 – will no longer be enough. “Rising demands mean this will not be sufficient to cover the budget gap for 2025-2026,” the council spin doctors said today.
No response: Angela Rayner not replied to Jason Perry’s begging letter
Today, Perry was unapologetic for heaping even more tax on to Croydon residents when he said, “We are being impacted by a recent and severe escalation in the financial pressures facing all councils.
“On top of these unprecedented challenges, Croydon is servicing a £1.4billion historic debt burden. That is neither sustainable nor fair on our taxpayers and I have written to the Secretary of State about the need for an urgent solution.”
As far as we can check, Angela Rayner, the Secretary of State for local government in the Morgan McSweeney government, has not bothered to reply to piss-poor Perry’s letter.
The Tory Mayor who failed to get a deal from the Tory government that had created the crisis in local councils now says, “We need a response from the government on the funding crisis facing the sector.”
Today’s council report won’t get discussed much, if at all, at tonight’s full council meeting at the Town Hall – the first full council meeting since July. Perry’s busted budget is not on tonight’s agenda. But the matter will be raised at next week’s council cabinet meeting, when petulant and pompous Perry will avoid taking questions from opposition councillors – Green, LibDem as well as Labour.
There’s the prospect of more emerging from an all-staff budget webinar lined up for October 18.
Read more: Perry pleads poverty when he has more Council Tax than ever
Read more: Mayor Perry busts his unbalanced budget with £42m overspend
Read more: Council consultants take six months to discover the obvious
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