When Croydon’s Mayor presents his budget tonight recommending residents pay a huge hike in council tax it still won’t ensure the borough’s financial future.
Even with the rise of 15 per cent generating income of £22million, which will protect frontline services and pay for council tax support for the poorest, the council is still reliant on the government agreeing to take the ‘unprecedented’ step of writing off over £500million worth of debt.
And even if this goes ahead, the council still has to sell off £100million worth of assets, make millions of pounds worth of savings to services and there is still the small matter of the £38million shortfall in the budget which goes on and on each year without any solution, said council’s Chief Finance Officer Jane West.
There are so many ‘ifs’ and ‘buts’ around the plan but tonight’s council meeting won’t be about the ‘angry’ residents demonstrating against an ‘unfair tax’ outside the town hall but about political showboating.
Labour Croydon will be hoping to benefit from the ‘Tory hate’ being stirred up around the Mayor Jason Perry and have been helping this along by going door to door getting residents to sign a petition.
While the Conservative Mayor and his cabinet will be keen to demonstrate how the former Labour administration, still represented on the opposition benches, are responsible for Croydon’s financial mess.
At last week’s Cabinet meeting Labour councillor Rowenna Davis was a loan voice of reason between the two political parties
She said: “Whilst, this council’s long term health remains unresolved the residents of Croydon will suffer most notably with the 15 per cent council tax rise. Last week scrutiny held a community meeting on the budget which was oversubscribed within hours of being announced. Residents told us they felt punished for mistakes and failures which were not theres whilst those who were responsible were not being held accountable. “
She raised the concern that in the long term, the budget ‘does not’ and ‘cannot guarantee’ the council’s financial security or stability without ‘bigger structural intervention’ from the government.
The chair of scrutiny said that the council could be pushed to financial breaking point again next year if it is not granted an “unprecedented” debt write-off by the government.
Cabinet member for finance, Councillor Jason Cummings, admitted that continuing to borrow more
from the government was not the answer to Croydon’s problems.
Cllr Cummings said: “The current model of capitalisation directions is unsustainable. Clearly, ongoing borrowing to fund revenue is not a sustainable position, that is why the government is so focussed on a solution to Croydon’s problems.
“It is the case that we do not have assurances of what that end solution is going to be. What government is being asked to do is a long and complex task which needs to be seen to be fair. This will take time and we have built that into the budget, the expectation that time will have to be taken.
“It is also without saying that while the council has made a request for writing off debt that may not be the solution that comes forward.”
Cllr Cummings accepted:“Some of these proposals before us including a significant rise in council tax is very much a case of the best of a bad set of choices. We fully understand and appreciate the concern of residents around this budget and that’s why such large increases in support are also being proposed as a part of that process. “
But he added that it was important to take every opportunity to improve the council’s finances and not ‘shy away’ from ‘tough decisions’ that will be necessary to return Croydon to sustainable local government.
The council is now a run by a mayor but the council is hung so has no overall control. Just as with the vote on the ULEZ expansion it is most likely that the two Green members and the one Liberal Democrat councillor will join forces with the Labour benches to oppose the Mayor’s plans and Conservative budget.
If they need a helping hand and the vote is tied then the civic mayor Cllr Alisa Flemming has the casting vote, which she used twice previously at the last full council to vote against the Mayor’s plans.
Cllr Cummings, also challenged the opposition benches to come forward with an alternative plan adding: “If anyone within this council thinks they have a better idea for a better course of action that we should be taking then they have the opportunity and have had the opportunity to put forward alternative proposals to those meetings. I wait to see if any come forward and what they contain.”
The authority is still waiting to hear back whether the government will wipe £540million worth of debt.
The council’s huge £1.6billion total debt costs it £49 million a year to pay back and keep up with interest payments. The council has also asked the government for £224m bailout loan, known as a capitalisation direction, to balance the council’s budget.”
Cllr Davis, told last Wednesday meeting: “The council’s debt is so big and the interest on it so crippling that Croydon cannot cut its way out of it. The only reason the council’s budget looks balanced over the next few years is because national government is allowing this administration to borrow more to fill the holes.
“This is equivalent to putting day-to-day spending on Croydon’s credit card which will only add to the council’s debts and interest payments. The only way out of this is for national government to go further not just by allowing the council to go a bit further on the credit card each year but to actually write off Croydon’s debt.
“There is currently no legal framework for national government to write off a councils debt, it would be unprecedented, there are no set timelines or guarantees. This means there is a real risk that the council council could be in the same position next year, limping on, borrowing more in each budget cycle and never dealing with the root cause of the problem.”
Opposition lead on finance councillor Callton Young highlighted how other councils were going through similar tough financial times, but responded Mayor Perry: ”It is clear a number of councils are going through difficult times but what is unique here in Croydon is the amount of damage that was self inflicted in this particular council by the councillors and officers running the council.
“There is an element of self infliction and damage here, that does not exist elsewhere and the level of debts we have here that are not supported by assets.”
Mayor Perry, said: “It is indeed unfair that the residents of this town pay the price for the mistakes of people over the past few years in this town hall. It is unprecedented, no authority has ever put itself in this position before.
“Alternative levels of council tax potentially requires even more borrowing and the levels of borrowing this council has undertaken in recent years is now the thing that is breaking this council’s finances completely.”