The Mayor will present his original budget to the full council tomorrow (Weds) – including the 15 per cent Council Tax rise – without any amendment.
In a letter to the council’s Chief Executive Katherine Kerswell, responding to the council’s objections to his proposed budget, Jason Perry sets out the reasons why he won’t be making any changes.
The Conservative Mayor challenges oppositon leader Labour’s Stuart King’s suggestion that an ‘alternative’ plan must exist in order to balance the Budget – without a Council Tax rise and says says in no uncertain terms: ‘It does not’.
The letter also states that Labour had known the Conservatives were asking for an above cap Council Tax increase since it was set out in the Cabinet Report in November.
Mayor Perry writes: “They have had over three months to consider their alternative, and yet no Budget amendment was put forward regarding Council Tax.
“A named finance officer was assigned to assist the Opposition develop their alternative Budget on 13 January and an extension was even granted for opposition parties’ budget amendments to be submitted but still only one amendment was received. “
An amendment submitted by the Green Group only relates to Community Infrastructure Levy (CIL) funding and while it would not have an impact on the General Fund it will be considered tomorrow.
Mayor Perry continues that Croydon Council faces one of the ‘most difficult’ financial challenges in the history of local government and these exceptional steps are required.
He says: “Whilst I share and understand Members’ reluctance to raise Council Tax above the cap, we must be realistic that our options are incredibly limited.”
Paul Dossett a partner in Grant Thornton, the council’s auditors, has also written to the Chief Executive and Chief Finance Officer Jane West spelling out their concerns about Croydon not agreeing a budget.
He warns: “As our previous public interest reports have set out, better use of taxpayers money in the past may have obviated the need for such significant Council tax increases at this time.
“Members must take full account of, and responsibility for, previous poor decisions as a context for future decisions. As set out in the Monitoring Officer’s letter- failing to pass the budget , will not only be unlawful, if would make a bad financial position worse and damage the Council’s reputation even further.”
At last week’s Council meeting his budget was defeated by 37 to 34 when Labour councillors joined forces with the two Green and Lib Dem councillors.
The Mayor was accused by some Labour councillors of raising the council tax for his own ‘personal reasons’ but he responds: “There is nothing politically expedient about raising Council Tax, it is not something I want to do, but the scale of the problems I inherited mean it is necessary if we are to set a balanced budget and get our borough back on track.
“Had any viable and financially balanced alternatives been put forward, I would have considered them. The lack of any such amendments from the Opposition suggests that they do not have a real alternative.
“For the avoidance of doubt, I have consulted the S151 Officer (Jane West) on each of the amendments put forward by Cllr King and she has confirmed, for the reasons set out above, that these do not constitute viable options to reduce the proposed Council Tax level. ”
Years of historic mismanagement has left Croydon with hundreds of millions of pounds of budget gap and over £1.6bn of toxic debt.
Mayor Perry explains that the only other possible solution would be to borrow another £66m over the coming three years.
He adds: “That would saddle the Council with even more debt, even higher yearly payments to service the debt and repeat the mistakes of the past. This would also require us to exceed the capitalisation direction granted by Government, which we are not lawfully able to do. ”
While Labour did not set out any amendments Cllr King did put forward suggestions at last Wednesday’s meeting which have since been explored.
These include the anticipated capital receipt arising from the Resonance Real Lettings Fund; the possibility of looking at the capital receipts (are cash flows resulting from the sale of fixed assets, debts and shares) and whether the council has the capacity to fully utilise the transformation funding proposed in the budget.
He said the one-off income from the Resonance Real Properties is not guaranteed and not going to provide ongoing revenue plus it can not be used to decrease the Council Tax.
The capital receipts, like selling a house takes time, he says and the sales of assets would not be able to use to fund everyday services.
Of the final suggestion he says the council does have the capacity to use the transformation funding and it was on the advice of the Independent Assurance Panel that it was set at £10million.
The Council tax rise will raise £20million to protect front line services and and extra £2million towards the Council Tax hardship fund.
The Leader of the Green Group also set out their reasons to refer the Budget back including a request for additional information on the criteria and operation of this proposed fund.
Feedback on an outline of the proposal will be sought from the council’s Scrutiny committee before a final decision on the arrangements for the fund is taken.
This budget proposes:
- – £36m of savings next year
- – £200m of capital receipts over a four year period
- – £224.6m of additional Capitalisation Directions from Government
- – A major transformation programme to drive down costs
- – A prudent but not excessive level of contingency budgets and reserves
- – A Council Tax increase of 14.99%