Croydon has been been haemorrhaging debt at £15,000 an hour for six years and is on the verge of being the first London borough this century to go bust.
Even with multi-million pound savings and 400 job losses unless the government bails Croydon out it will have to issue a Section 114 notice and hand over control of the borough to government-appointed commissioners.
Councillor Tony Newman, council leader for six years, then stood down less than two weeks after defeating a ‘no confidence’ vote in him..
Last week, Cllr Hamida Ali, Newman’s fellow Woodside ward councillor, (pictured together) narrowly won the Labour contest to become the council’s first BAME leader.
While Covid brought the council’s financial crisis to a head it had already racked up £1.5billion in debt before the pandemic which created a £42 million funding gap and is unlikely to be reimbursed by the government.
During last week’s full council meeting Newman made the surprise announcement, that he would fall on his sword. His decision came days after ally, cabinet member for finance Simon Hall resigned for ‘personal reasons’ just 48 hours after
the council’s external auditors revealed it was considering issuing a “Report in the Public Interest”, as they were so concerned over the handling of the borough’s finances.
Newman replaced Hall with newcomer to the cabinet Thornton Heath councillor Callton Young who said he was ‘shocked and surprised’ that the council did not have stronger governance around finance.
Aside from the questionable decisions around investing £80million in a failed hotel and shopping complex the council has come in for harsh criticism over its relationship with the council’s house builder Brick By Brick which it loaned over £250million.
Amid the chaos in August the council’s £220,000 per year chief executive Jo Negrini slipped away with a reported £440,000 pay off to be replaced by senior Whitehall civil servant Katherine Kerswell as the interim chief executive. She is negotiating with the Ministry for Housing, Communities and Local Government for a capitalisation direction to enable the 2020/21 budget to be balanced with a Renewal Plan to develop a sustainable budget for Croydon.
But, Cllr Jason Perry, Croydon Conservative leader, who said the council had been racking up debt at £15,000 an hour since 2014, questioned why the MHCLG should believe the new leadership would be any different when the entire Labour cabinet and councillors had backed Newman’s position only weeks earlier?
Conservative Cllr Lynne Hale said it was critical that they all worked together to get Croydon out of this ‘financial mess’ but she felt there was ’too much’ secrecy especially around Brick by Brick and for the bid to work she said ‘openness and transparency’ were essential.
Newman said it was ‘absolutely fundamental’ that all parties came together to support the bid to the MHCLG, especially with Covid on the rise putting added pressure on council services. He added: “I’d go as far as to say getting that bid right is going to have lives depending on it.” He said that 57,000 people were currently furloughed in Croydon and the borough had never seen an economic and health crisis like it before.
Cllr Ali who had been the cabinet member for Safer Croydon and is employed as a Workforce Equality, Diversity and Inclusion Manager, at the Greater London Authority said: “I joined the Labour Party to tackle inequality and make a difference to the world around me. I am driven by a strong sense of duty to serve and a passion for the borough we all love. I am ready to work with you to provide the leadership the council needs, at a time when it needs it most.”