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Government must act to end the chaos, austerity and decline

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New dawn fades?: even getting rid of the £82,000 per year ‘executive’ Mayor won’t solve Croydon Council’s problems

Will Labour’s council reforms announced this week build a new Jerusalem in our hard-pressed town halls? ANDREW FISHER analyses the government’s English Devolution White Paper, and what it might mean for Croydon

‘Stability, investment and reform’: deputy PM announcing her devolution plans this week

Unveiling her new White Paper on Monday, the Secretary of State for Housing, Communities and Local Government, Angela Rayner, said, “It’s a plan for putting more money in people’s pockets, putting politics back in the service of working people and a plan for stability, investment and reform, not chaos, austerity and decline.”

I’ll believe it when I see it.

In Croydon, we’ve had a 21% increase in Council Tax since 2023 (taking more money out of people’s pockets), while public services are being closed or cut back. And despite all that pain, the council has sunk to a worse financial state than ever – with a £83 million budget deficit forecast for 2025-2026.

“Chaos, austerity and decline” certainly sums up Croydon Council’s performance for much of the last decade.

The eye-catching feature of the White Paper for Croydon is the curiously-phrased commitment to “discontinue” local council mayors, which means we might soon dispense with the £82,000 “Executive Mayor” who promised to “fix the finances”, but has made them even worse.

According to the ironically named “improvement and assurance panel”, Croydon has a “substantial overspend projected in the current year” and “is likely to require a greater level of exceptional financial support in 2025-2026 than in the current year”.

Unbalanced budget: Croydon Mayor Jason Perry

Binning Mayor Perry’s ineffective reign may be welcomed by many – and will save the small change of his £82,000 salary (plus all his employment costs and expenses). But it will do nothing to solve the fundamentally unfixable finances of Croydon Council.

Croydon’s woes are the result of nationally-imposed austerity and locally delivered incompetence by at least the last three administrations. But the dire state of council finances nationally was reinforced by the decision of the National Audit Office last month to refuse to sign off the whole government’s accounts for the first time.

The reason? “The severe backlogs in English local authority audits” as 90% of local authorities failed to submit reliable data.

Under the Conservative-led coalition government between 2010 and 2015, the Audit Commission was abolished, and councils suffered huge cuts to their funding from the central government. Labour has today announced they are consulting on a new Local Audit Office to build an effective early warning system to fix local audit.

As in other councils around the country – like Thurrock, Slough, Birmingham and Woking – Croydon’s finances are now so dire they cannot be fixed by any amount of local cutbacks or asset sales.

And so it will fall to the Labour government to fix one of the most intractable messes they have inherited.

The main focus of the White Paper is the abolition of district councils that sit underneath county councils. Currently our neighbours in Surrey have a county council that has responsibility for social care and children’s services and then a set of district councils, including Epsom and Ewell, Tandridge and Reigate and Banstead which deal with planning issues and emptying the bins.

Announcement: local government minister Jim McMahon is sweeping away Gove era ‘reforms’

Consultants PriceWaterhouseCoopers estimated in 2020 that such a restructuring would produce “an annual post-implementation net recurring saving of £700million”. That’s not a figure to be sniffed at but, to put that in context, the Institute for Fiscal Studies estimates that local government spending on services reduced by £10billion in the 2010s.

If that money is recycled into better funding settlements for all councils that may help things, but it won’t prove transformational for councils like Croydon.

Yesterday,  the government announced the provisional Local Government Finance Settlement, or LGFS, which “will provide £69billion for councils across the country, a real-terms increase of 3.5% from 2024-2025.”

That’s above-inflation and a welcome increase, but again not on a scale to meet the rising pressures on social care, children’s services and demand for emergency accommodation (let alone sort troubled councils like Croydon).

And it does not address the long-standing injustice that Croydon receives far less funding than neighbouring Lambeth – despite having comparable levels of deprivation.

Intriguingly, the provisional LGFS, says the following: “We will target additional funding within the Settlement towards the places that need it most, increasing funding for social care and introducing a new ‘Recovery Grant’ that will increase the efficiency of our funding by targeting money towards areas with greater need and demand for services (we have used deprivation as a proxy for this).”

Might this mean Croydon gets a larger boost?

Not so far.

Croydon’s settlement for 2025-2026 increases from £98.3million this year to just £99.7million – a below-inflation 1.4% increase.

As the Institute for Fiscal Studies wrote back in September, “devolution may be sexier, but updating the local government finance system is vital.”

Labour has a tough inheritance – and fewer areas are tougher than local government – but nothing announced this week looks like it will relieve Croydon’s misery. A debt write off is needed and then fair funding to meet local needs – the people of Croydon have suffered enough.

Andrew Fisher’s recent columns and interviews:

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