CROYDON IN CRISIS: The south London council ‘remains one of the most financially distressed in the country’, according to the local government minister. By WALTER CRONXITE, political editor
Under a cloud: Croydon has lost control over its spending, according to the chair of the improvement panel who has been overseeing the council’s work for four years
Cash-strapped Croydon Council is going to need an even bigger government bail-out in 2025.
That’s the damning admission in its latest report to government from the Whitehall-imposed (non-)improvement panel, with a “budget gap” in 2025-2026 predicted to reach £83million – the worst ever seen in Croydon.
The letter, signed by Tony McArdle, the chair of the improvement and assurance panel, provides stark, independent confirmation that Mayor Jason Perry and the council chief executive, Katherine Kerswell, have failed in their mission to balance the books, despite making tens of millions of pounds’ worth of cuts to services while hiking Council Tax to record highs.
Croydon “remains financially unsustainable without significant government support”, McArdle says.
And the improvement panel is supposed to be ending its time in Croydon in six months’ time. Yet in his latest letter, McArdle seems to admit that the council is no more financially stable now than it was when he and his team of “experts” were parachuted into Croydon in early 2021.
Exit strategy: Tony McArdle is the government-appointed troubleshooter who is at risk of leaving Croydon in a worse state than when he arrived in 2021
“The majority of actions set out in the Exit Strategy have been met to time and to the necessary quality,” McArdle writes.
“An exception is the objective for financial sustainability, which is at risk.
“You will be fully aware of the current challenging external environment facing the sector. The substantial overspend projected in the current year… reflects this, with a limited number of unit cost reductions being evidenced.
“The council is likely to require a greater level of exceptional financial support in 2025-2026 than in the current year.
“The ability of the council to meet its asset disposal target this year is also at risk.”
The latest report, McArdle’s ninth, is the first since the General Election, and so is his first to Angela Rayner, the deputy Prime Minister and Secretary of State at the Ministry of Housing, Communities and Local Government. The letter is dated November 15.
The MHCLG published the letter this morning, a quicker turn-round than was the case under the Conservative government (McArdle’s previous report, from April, was finally released today, too, eight months late).
Austerity bites: Angela Rayner has inherited huge problems in local government from the Tories, but especially in Croydon
But the November report’s publication was still too late for it to be discussed at last night’s full council meeting – conveniently so for piss-poor Perry, who after almost three years in charge, is no nearer to “fixing the finances” as the Conservative promised when seeking election as Mayor in 2022.
As Inside Croydon first reported in September, the cash-strapped council under Perry and Kerswell is hurtling towards the rocks of bankruptcy with a vast overspend in this financial year, despite the help of the latest £38million bail-out from government.
McArdle, who has had oversight of the council’s financials while all this has been going on, was forced to confront this matter in his November report. According to the latest figures coming out of Fisher’s Folly, they are predicting an overspend of £33.6million for the current financial year, and they were projecting a budget gap of £40million for 2025-2026.
But according to McArdle, that’s not even the half of it.
“The council’s cabinet has approved its draft 2025-2029 Medium Term Financial Strategy (MTFS) for public consultation,” he explains.
“A final MTFS will be considered by full council in February 2025. The current MTFS (approved in February 2024) projected a budget gap of £40million for 2025-2026 (assumed capital direction of £38million plus £2million deficit).
“In the draft MTFS, the gap has increased to £83million (assumed capital direction of £38million plus £45million deficit).”
McArdle outlines that the financial position has “significantly deteriorated” during 2024, because spending pressures in areas such as children’s placements, homelessness and home-to-school transport “had not been identified” when the budget was set.
And there’s more… The cumulative deficit “is projected to grow” in the following three years.
Nine and out…: possibly McArdle’s penultimate report, with Croydon’s finances worse now than they were for his first
In his formal response to McArdle’s report, local government minister Jim McMahon noted that there had been “significant” progress, but added that “the council remains one of the most financially distressed in the country”.
McMahon failed to hold out any solution to wiping out Croydon’s historic debts, saying it is “self-evident that there will still be difficult decisions to come”.
McMahon also made comments about another basket-case council, Nottingham City Council. Which was where Kerswell was interim CEO in 2020, before she was installed in Croydon.
In his letter, McMahon added that it is essential for there to be a “clear strategy for the form respective councils will take as their new operating model, and that prevention and reform of local public services is central to it”.
McMahon wrote: “The road to financial recovery in Croydon and Nottingham must be met with the seriousness it deserves.”
Croydon Mayor Jason Perry will be increasing Council Tax by the maximum he is allowed in April, which is likely to bring increased in the local rates since he has been in power to 27%.
When he took over in 2022, Perry told a radio interviewer that “things are going to get worse” in Croydon. It’s looking like the only promise the Tory Mayor has managed to keep.
- Read the improvement panel’s report for Nov 2024 by clicking here
- Read the response from minister Jim McMahon by clicking here
- Read the improvement panel’s Apr 2024 report by clicking here
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
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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
Can a council actually go bankrupt, like a company? If Croydon was a company, it would have ceased to exist a long time ago… somes asses need kicking and some P45’s handed out
In return for debt forgiveness Croydon council could be part of a local government reorganisation of the south and east of the Borough joining Bromley and the North West joining Lambeth.
Are you having a giraffe? For the sake of Croydon – Central Government will offer major local authority reorganisation and debt forgiveness to Perry alone despite dozens of councils being in dire financial straits. Sounds like the blue sky thinking that has got Croydon into this mess in the first place.
Why would Bromley Council (or Lambeth) want the liability of Croydon in addition to its own challenges? Such a merger might just result in tipping Bromley and Lambeth over the edge, quicker.
How would it serve local democracy and accountability to have even larger boroughs (Bromley Borough was created in 1965 by merging 5 boroughs or local government units)?
From this and other coverage and reports, a problem appears to be the inadequacy of Government financial support, through the Revenue Support Grant to most Local Authorities while National Government adds responsibilities to Local Government.
Of course, as almost daily illustrated by Inside Croydon, poor decisions have been made locally, too.
So the quack remedy we’re being force fed by Perry isn’t working. That won’t stop him continuing to administer it, making cuts to our services, flogging off our assets, increasing our taxes and gaslighting us about his actions and inactions. To do otherwise would mean he’d have to admit he was wrong from the off
The Council has been badly run for at least the last 15 years. Perry’s promise to ‘fix the finances’ should never have been taken seriously when he was one of the ones that helped get us in this mess in the first place.
The current plan of sacking more staff and employing more senior managers obviously isn’t working, and wasting millions on management consultants doesn’t appear to have achieved anything either.
Now that it’s clear that the Labour Government are just going to continue with Conservative cuts to public finances, no one with any sense would claim that solving all of Croydon’s problems is going to be easy. But when you are in trouble, the first thing you should do is stop making it worse. Conservative and Labour seem incapable of doing that. It’s time we tried something different.
I suspect that whoever won the last mayoral election would be in the same boat irrespective of party politics. When the finances got into such a deep shit filled hole, there is no realistic way out without central government support (money) if any core statutory services are to be provided to the people of Croydon.
Suspect you’re right.
The really irritating thing is, no matter how bad things might be, and no matter how incompetent the council’s senior professionals turn out to be, we all end up subjected to the usual yah-boo politics.
No one has any answers. No one takes responsibility.
Windsor Council is proposing a 25% increase in Council Tax. If that is permitted expect at least that for Croydon.
No councils will be allowed to raise Council Tax by more than 4.99% unless they have a referendum (“Do you want to pay more Council Tax?”), or get special dispensation from the government, as happened in 2023 when Mayor Jason Perry asked Michael Gove to be able to increase Croydon Council Tax by 15%.
Why are things like social care and child services, which are srtrictly regulated statutory responsiblities still left to local councils to finance? Juggling it with paying to cut the grass, clean the streets etc, it must be time for this to be taken over by central government.
We all know, this is down to the previous Labour Council. Why do you blame Jason Perry ?
Because you are wrong. This is all down to 15 years of Tory austerity and the pompous incompetent Jason Perry, who has hiked Council Tax by 21% and has spectacularly failed in his promise to “fix the finances”.
The geezer’s a buffoon
Croydon Conservatives started the rot with their disastrous CCURV project and other silly schemes that put our borough’s finances £0.8 billion in the red by the time they lost to Labour in 2014 (iCs passim, e.g. https://insidecroydon.com/2024/07/10/perry-admits-he-has-failed-in-begging-letter-to-labours-rayner/)
Perry was part of Mike #Wadgate Fisher’s Cabinet, and was paid extras to take the lead on planning, regeneration and transport. We all know how well that turned out. Buffoon? Pillock, more like it