EXCLUSIVE: Buried in the avalanche of emergency documents issued around the government’s statement on the mismanagement of the council was a timetable for the proposed intervention. By STEVEN DOWNES
Commissioners could be in place in Croydon for less than a year, as they deliver what government minister Jim McMahon last week described as “a short and sharp reset, with fast action… to shift the dial” and finally rein-in Croydon’s “runaway” finances.
That’s according to a government document, released last week among an avalanche of papers connected with McMahon’s announcement that he is “minded” to use Commissioners, after giving up on Mayor Jason Perry and his chief exec, Katherine Kerswell, to salvage something – anything – from the wreckage of Croydon’s overdrawn account with the government.
In his written statement to Parliament last week, McMahon had described Croydon as “one of the most financially distressed councils in the country”, mentioning its debts of £1.4billion and his concern that Mayor Perry and Kerswell were seriously planning to increase that borrowing to around £2billion by 2029 – proposals which the previously docile improvement and assurance panel installed in Fisher’s Folly described in its latest report to the MHCLG as “impossible”, saying that it would lead to Croydon Council’s complete “collapse”.
McMahon also mentioned the £136million bail-out loan he signed off for Croydon in March. Totting up all the Emergency Financial Support given to Croydon since March 2021 at £553million, McMahon said: “This is simply not sustainable.”
Billet doux: the Whitehall letter to Katherine Kerswell, which included the suggestion that she should ‘reflect’ on how she might work with Commissioners
A direction letter sent to Kerswell on Thursday by James Blythe, the deputy director, “local government stewardship and interventions” at the Ministry of Housing, Communities and Local Government (Blythe must be an increasingly busy civil servant), laid out a timetable for what is likely to happen.
“Commissioners will report to the Secretary of State on the delivery of the London Borough of Croydon’s improvement plans after a six-month period, with a second report to follow a few months later,” Blythe wrote.
“You will see the proposed directions are put in place for two years, but ministers intend that the Commissioners’ two progress reports would inform their decision as to whether to step down from a Commissioner model after a year.”
That strongly suggests that Whitehall – both MHCLG and the Treasury – already have a cunning plan for Croydon, although that almost certainly won’t be a debt write-off. Otherwise dozens of local authorities up and down the country will want one, too…
Given that Blythe’s billet doux was directed to Kerswell personally, it included an interesting line which appeared to suggest she may need to consider her own, £204,000 per year position: “You will wish to reflect on the impact the proposed intervention package could have on your improvement plans and the way you would work with Commissioners moving forward.” Our italics. Don’t hold your breath.
Blythe’s letter was also sent to Jane West, the council’s finance director (“Section 151 officer”, in councilspeak) and Stephen Lawrence-Orumwense, the former estate agent now employed as the council’s senior legal adviser.
The letter came with a five-page appendix, a sort of step-by-step guide to the appointment of Commissioners, which you might usually expect with flat-pack furniture from Ikea.
‘Minded’: Secretary of State Angela Rayner
Formally, Blythe’s notice says that the Secretary of State, meaning Angela Rayner, “is minded to use powers within Section 15(5) and Section 15(6) of the 1999 [Local Government] Act to appoint a team of Commissioners who the authority will be directed to work with, some of whom would have the power to exercise specific functions of the authority”.
Under Croydon’s intervention package, the Commissioners will be expected to:
a) Provide the additional scrutiny, external challenge, advice and monitoring needed to oversee the improvements.
b) To stabilise Croydon’s finances and to ensure that Croydon is able to continue to deliver services for the benefit of Croydon residents.
c) Deliver financial sustainability, including by closing any short or long-term budget gaps and reducing the authority’s exceptionally high level of external borrowing.
d) Increase corporate grip of the authority’s risk management and provide assurance of compliance with all relevant rules and guidelines relating to the financial and debt management of the authority.
e) Agree as necessary any changes needed to the Authority’s operating model and redesign of council services to achieve value for money and financial sustainability.
Kerswell was also given further directions to assist the work of the Commissioners, including access “to any premises of the authority…”, “to any document relating to the authority…”, ; and “to any employee or member of the authority”.
And, of course, it will be for Croydon to pay the Commissioners’ fees and expenses, just as the long-suffering Council Tax-payers have been forking out for the non-improvement improvement panel since 2021 (current estimated cost: £1million).
But what could be the rabbit that the Commissioners might pull out of their hat to finally reduce the huge annual costs of servicing the council’s debt?
Banana republic: is Whitehall planning ‘the Argentinian Treatment’ for Croydon?
At this stage, no one can know with any certainty. But one suggestion has been something referred to in City circles as “the Argentinian Treatment”.
This would involve rescheduling the council’s loans, which are mostly with the government’s Public Works Loan Board. Instead of having to make payments over a few years, Croydon could have its repayments spread out over many decades, potentially drastically reducing the amounts due each year. There might even be some kind of reduction on interest rates.
“The Argentinian Treatment” is so-called because it is what the International Monetary Fund does with banana republics when they default on their loans. Argentina has defaulted on its debt nine times since gaining independence, most recently in 2001.
For many of the borough’s residents, the banana republic treatment may be a solution that is entirely fitting for those who inhabit the upper floors of Fisher’s Folly.
Read more: Panicked Perry admitted to Rayner: I can’t balance the budget
Read more: Kerswell’s ‘Stabilisation Plan’ has failed before it is approved
Read more: McMahon acts after serious concerns on ‘aspects of leadership’
Read more: Borrowing plan would lead to council’s ‘collapse’ says report
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Perhaps Channel 4 could join the party and re-show the 34 year-old Alan Bleasdale series GBH as the Government Commissioners begin work in Croydon ?
GBH is available for streaming https://www.channel4.com/programmes/gbh as is The Men from the Ministry https://www.bbc.co.uk/programmes/b009smq5, starring long-time Norbury resident, Deryck Guyler
So it will be all over by the time of the next Mayor Election 2026 or will the DEMOC be all over by the time of the next Mayor Election?
Have a funny feeling that when they dig into the deal making and general all around ineptitude of Croydon’s financial management of the last two decades they may find out what happens as usual to those who believe in Santa Claus and it will be all over by Christmas Brigade.
The problem with the 12 month declaration is that this is going to feed into the conspiracy theory (which is all the Tories have got) around the timing of this.