CROYDON IN CRISIS: Ahead of tonight’s Council Tax-setting meeting, an exec director says the authority cannot continue by borrowing more, with overspends likely to rise to more than £200m by 2028. By our Town Hall reporter, KEN LEE
Jason “Fix the Finances” Perry will tonight present his third council Budget since becoming Mayor of Croydon, with the council’s debts still rising, with overspends at record levels and with the local government minister and the council’s finance director agreeing that his plans for coming years are completely unsustainable.
Tonight’s Town Hall Budget meeting will be staged with Perry, his chief exec Katherine Kerswell, and cabinet member for finance, Jason Cummings, all safe in the knowledge that the government has agreed to their request for an extraordinary £136million in “capitalisation directions”, the second-highest granted in the country.
Yet even with the 5% Council Tax hike Perry wants to impose on residents from April – bringing the total increase in CTax levels under the Mayor since 2023 to 27% – and the latest government bail-out, even some of the Town Hall’s most senior officials are now admitting publicly that there is no way out of the black hole that the council’s finances have fallen into.
Given Croydon Council’s position shows no real improvement since it issued its first Section 114 notice in November 2020, which prompted the government to parachute in its “improvement and assurance board”, there are growing doubts on Katharine Street that £1,000-per-day Tony McArdle and his motley crew of improvement panel “experts” will be able to complete their “exit strategy” by this summer as was planned.
Croydon is the local council that has put “exceptional” into the Whitehall mandarins’ phrase “exceptional financial support”. The latest bail-out brings to £308million the total granted to Croydon since 2019 by government in exceptional financial support – which is actually just permission to borrow even more. Ultimately, Croydon Council needs the government to write-off some of its debts, not just keep adding to them.
‘This is not sustainable, nor is it an effective use of public money’: council finance chief Jane West delivers her verdict on the latest and future bail-outs
This is reflected in the Section25 annual statement issued by Jane West, the council’s finance director. “This is not sustainable, nor is it an effective use of public money,” West wrote in her report.
Presenting that report to the council cabinet’s budget meeting two weeks ago, West said: “I am not able to give an endorsement that the council is forever financially sustainable as a result of our projections.”
She said that in 20 years as a senior local authority financial official, she had never before had to issue such a statement = apart from the time when Mayor Jason Perry issued his S114 notice and clobbered Croydon residents with his 15% Council Tax hike.
Because, according to West’s legally required accountancy report, the £136million overspend in the coming financial year is only going to get worse. Much worse.
In her report, West has written: “The council is not financially sustainable with an annual revenue budget gap of £136m[illion] in 2025-2026… The annual revenue budget gap is modelled to increase to £203m[illion] by 2028-2029. This is despite working closely with the MHCLG and the improvement and assurance panel to seek a solution to the council’s
financial situation and the improvements in the council’s functions.
And West continued: “The process of continuing to use capitalisation directions increases the financial pressures on the council’s revenue budget by increasing its net cost of borrowing into the future, from £59m[illion] budgeted for 2024-2025 to £108.8m[illion] projected for 2028-2029 – some 21% of the council’s budget.”
Requirements and conditions: local government minister Jim McMahon
Given that the exit plan for the “improvement” panel requires Croydon to demonstrate “financial stability” by the end of March, West’s findings add to growing evidence that McArdle & Co had better cancel their summer plans.
It was only at the start of this week that the council released a letter, dated February 20, from Jim McMahon, Labour’s local government minister, sent to Mayor Perry after the decision was reached to grant Croydon’s begging bowl request for £136million towards the coming financial year.
This settlement is coming with requirements and conditions. McMahon says that he expects the council to, “Develop[s] and implement[s] a resourcing plan, to be agreed with the improvement and assurance Panel, to deliver its transformation plans at an accelerated pace and with sustainable and long-term savings”, and to “Progress[es] the actions in its stabilisation plan, as agreed with the improvement and assurance panel.”
McArdle and his panel have been asked to deliver their next report to the Secretary of State, Angela Rayner, in April. Croydon has also been told that Rayner will expect “the authority makes good progress against its Improvement and Recovery Plan, as assessed by the improvement and assurance panel, in their regular reports to the Deputy Prime
Minister”.
As tonight’s Budget meeting of full council in the Town Hall Chamber will demonstrate yet again, Croydon’s £84,000 per year Mayor Jason Perry may be in the position, but is not in power.
- Read Jim McMahon’s Feb 20 letter to Croydon Mayor Jason Perry
- Read Jane West’s statutory Section 25 statement for 2025-2026
Read more: Government grants Perry’s record £136m council bail-out plea
Read more: Council Tax hits £2,500 per year as debts continue to mount
Read more: Mayor Perry busts his unbalanced budget with £42m overspend
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This has been obvious from the very beginning. Additionally, selling off council assets to try to shore up the budget is not the way forward because it makes a neglible amount of difference and just reduces the quality of people’s lives. The best way to solve this is to get some people in the council who are willing and able to do a good job. That probably requires a total change at the top.
That, and around £600m
I thought that Croydon Council’s debt was around £1.2bn?
This article does, halfway through, clarify that this year’s £136m Govt ‘bail out’ is a Government loan adding to. the existing debt mountain.
‘Bail out’ can be confused with ‘grant’ or :debt write off’ which I understand, is not what it is.
The debt is £1.4bn to £1.6bn (it varies from month to month, report to report).
No government is going to write-off all Croydon’s, or Woking’s, or Slough’s, or Birmingham’s… (get the drift?) debts.
Croydon’s ask, to bring the debt into manageable levels, was previously £500m. With the latest capitalisation, that might increase.
Always money for bombs and wars though.
Money for “defence” (ie. bombs and wars) is national government money. Croydon Council can’t afford/shouldn’t need to buy weapons, although as we found out with bus shelters, if some American crook offers Croydon some cheap weapons, Piss-poor Perry might take up the offer, thinking he can sell them on to the National government, after marking up the price ?!
£1,000 per day for Tony McArdle’s time is expensive enough, but what is the total daily cost of him AND his motley drew of improvement panel “experts”? And how many days do they work/meet for? If it is only 5 days per year, that shouldn’t cost too much, or save the council too much money if we can get rid of them in the summer? But if they work “full-time” in/on Croydon, that is £250k for Tony McA alone !
You should read iC, Jim.
https://insidecroydon.com/2024/04/19/603000-the-soaring-costs-of-croydons-improvement-panel/
What does Croydon really own that can tackle this amount of debt. When it starts talking about selling assets such as Shirley Park Golf Course that can make a proper dent into it’s debt pile we know it is being really serious. Instead it will fiddle about saving the odd thousand to Carers Associations which will probably end up costing more in the long run as economic activity is transferred out of the local economy. The waste of legal fees and employment of special advisors seems to go on perpetually and the £millions it is now reached will be another significant amount of the accumulating debt pile. The likes of Perry are completely inadequate to tackle the powerful vested interests that underly Croydon and whose real interest is to see financial misery transferred onto local residents while the status quo is maintained. Since the likes of Perry are these vested interests.
At last – a correct use of the term ‘sustainable’
If central government imposes an improvement panel on the council, the least they should do is pay for them. They’ve improved nothing and only made things worse: borrowing is up, debt is up, services are down, assets are down. Our finances are worse than ever and we only aren’t declaring bankruptcy every year because the government are ‘kindly’ allowing the council to borrow ever increasing amounts to add to the debt.
The government is going to have to get very creative how to solve this problem, beyond writing billions off in debt around councils, which I know they would be very reluctant to do, or having fairer funding or taking away some of a councils financial responsibilities such as elements of care, some bold plans need to take place.
You ought to have been on our podcast panel recording, Carl.