Croydon had operated a leader and cabinet model since the local elections in May 2010, but said Penn executive power was rarely exercised by the leader in isolation, which is why the Grant Thornton report concluded there had been ‘collective blindness’ and that this led to a failed culture of decision making relating to financial sustainability.
It is a legal requirement for councils to set a balance budget and the council’s fragile financial position and weak underlying arrangements were ‘ruthlessly’ exposed by the impact of Covid.
The report sets out that ‘changes to the Local Plan in Croydon and an increase in housing development within the borough had been ‘politically divisive’ and ‘become a key point of political contention.’
One interviewee said that there was a ‘winner takes all’ approach and that Croydon was a ‘highly political place and that party politics permeated everything there.”
Penn learned from his interviews that there were issues around record keeping and key discussions, about, for instance the proposed investments in the £30 doomed Croydon Park Hotel investment could to be found.
Similarly, there were no formal records of details that anyone was ‘keeping an eye’ on the £200 million of legal loan agreements to Brick by Brick and there was no clarity about which officer was accountable.
Another interviewee who was a member of the Executive Leadership Team said there ‘seems to be a total lack of checks and balances that are the norm elsewhere’ and that they were ‘alert to the risk that when you start to work for a dysfunctional organisation like Croydon if you are not careful you become part of the dysfunctional picture very quickly.”
The senior officer also said there was an ‘absence of political curiosity in Croydon.”
Interviewee 12 told Penn, that: “Labour Party members outside Croydon had commented that Croydon has had longstanding problems with finances, maybe over the last 10 years but this was never discussed at a cabinet meeting.”
He went on to state that the cabinet was told about the potential purchase of Croydon Park Hotel and that it would have a £1million revenue stream but had not really been involved in the decision.
He said that there was a ‘pattern’ of lack of cabinet involvement in such ‘big decisions’ and that it was ‘not clear what level of risk assessment took place or whether any due diligence was actually done’ over the hotel purchase.
Adding: “Cabinet members who were not in the ‘top group’ always had to consider whether it was worth it to raise issues and risk a slap down, and too often decided that it was not worth it.”
Interviewee 10, identified as a Labour politician who had served in the cabinet said that the draft Report in the Public Interest was the ‘first account that had set out the council’s financial situation so ‘plainly’ and that he felt ‘really angry with those involved in creating the situation’.
They said there had not been enough information and discussion at cabinet meetings about the council’s financial issues.
Another Labour member said that the former cabinet of Newman and Hall had been dominated by a ‘small group’ of cabinet members who took decisions and that the rest of the cabinet and in the same way officers, failed to challenge or speak up. If that had happened the problems the council is now dealing with would have been identified much earlier.
The ‘theme’ said interviewee 18, at Labour group and cabinet ‘away days’ was always that things might be difficult, that the council continued to be underfunded, that the Ofsted judgement had skewed expenditure and latterly that COVID had made things even more difficult – but always the conclusion was that things were under control and being managed.
They said they were ‘very disappointed’ to hear at a General Purposes and Audit Committee from the financial consultant that members ‘had not, in his opinion been provided with the correct or adequate financial picture to make fully informed decisions.”