Croydon council has been accused of “corporate blindness” over its failure to tackle the serious nature and urgency of the financial situation facing the borough.
External auditors have today issued a ‘report in the public interest’, criticising how the Labour run council’s finances have been managed since 2014. It is the most serious measure an external auditor can take – only five have been issued across the country since 2015, with none in London.
The damning report highlights that the council has faced a ‘deteriorating financial resilience’ for a number of years and had not responded promptly to previous audit recommendations and concerns. It was also criticised for not formally bringing the extent of the financial mess to the public attention sooner.
Areas noted for particularly concern include: overspends in Children and Young People and Adult Social Care over a number of years, which are now facing multi-million budget cuts with the council having to make hundreds of staff across services redundant.
Since 2014, the council debt has doubled to £1.5 billion, with £15,000 borrowed every single hour, and the council is now having to go to the Government for a bail out.
At a recent Audit Committee an independent expert, brought in to review Labour’s financial mess, made clear that the same errors have led to overspends year after year and that the cabinet had not taken action to tackle overspends.
Labour Croydon has reduced the Council reserves to just £7 million while lending £250 million to housing its housing builder Brick by Brick, which is yet to make a profit.
Among other concerns raised are the council’s:
- Reliance on use of capital receipts for transformation expenditure.
- Managing Dedicated Schools Grants within existing budgets
- The impact of Unaccompanied Asylum Seeking Children expenditure
- The complexity and risk of the council’s subsidiary company structure
- The council’s governance of it’s financial decision making.
The report also identifies that there has been “corporate blindness” to the seriousness and urgency of the financial situation and that there is little evidence that £73m of transformation money has reduced demand, delivered savings or reduced costs in children’s or adults’ social care
It goes on to be critical that:
- The council has focused on service improvement without sufficient attention to controlling overspends
- There has been investment in the Place area (regeneration) without addressing if that investment was delivering the intended outcomes
- Numerous opportunities have been missed in recent years to tackle the Council’s financial position
Jason Perry, leader of Croydon Conservatives, said: “The writing has been on the wall for many years – the Labour Cabinet simply didn’t care that their budgets were overspent and that the Council’s reserves were frittered away, preferring to buy failing hotels and shopping precincts”.
“Now the poorest and most vulnerable residents in Croydon will suffer as services are cut back, whilst the majority of the Labour Cabinet who oversaw these failures remain in charge.
“Croydon Labour is failing at every level and can’t be trusted with our money. Croydon deserves better.”
Since August the chief executive Jo Negrini has left the council and in the last month cabinet member for finance Simon Hall resigned and leader Tony Newman stood down.
Cllr Hamida Ali who was voted in as the new Labour leader; last night replaced three of Newman’s cabinet: Alison Butler, Paul Scott and Stuart Collins.