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
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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