Croydon north MP Steve Reed has said Croydon Council must change its culture and open itself up to public scrutiny after he revealed he was mislead about the council’s financial position.

The Shadow Secretary of State for Communities and Local Government, speaking to The Chronicle, said: “In briefings from the council as late as this summer I was told there wasn’t a problem and the council was operating within budget.”

When The Chronicle asked how he felt about being misled he replied: “Part of you is aghast that the council wasn’t telling me what was going on but I am not entirely clear that the council knew what was going on.”

He added that when he had asked about departmental overspends he had been told they had been ‘reigned in’ and was assured they were being ‘managed’.

In November the council issued a Section 114 notice which is the equivalent of going bankrupt.

At recent cabinet meeting it was revealed that Croydon would be asking the government for a capitalisation direction (bail out) of £130million and intends to make a submission to the Ministry of Housing, Communities and Local Government in mid December.

So far 400 jobs have been cut and more to come as the council faces a £67 million budget gap . It will be required to make savings of £79m over 2021/24 to meet future pressures not funded within the existing base budget. 

The auditors highlighted that councillors on both sides had voted unanimously for the 20-21 budget despite them red flagging spending and financial arrangements dating back to 2017-18.

However, while some have been quick to blame the pandemic for the council’s predicament finance director Lisa Taylor told councillors it was ‘not simply brought about by pandemic’ and that conversations had gone on throughout summer with MHCLG and Cipfa (Chartered Institute of Public Finance and Accountancy). 

She had been told that if the financial issues were not simply about COVID she should issue a Section 114 – the equivalent of bankruptcy. She has to issue a Section 114 every 21 days until the council can balance its budget.

The proposed multi million cuts to services include closing libraries and recycling centres, reducing the enforcement of noise nuisance, less grass cutting in parks and reduced support for the borough’s bowling clubs and outdoor facilities.

MP Steve Reed said it was right for Cllr Tony Newman to stand down as leader and that the council needed to ‘rebuild trust’. He said there clearly had been a ‘breakdown’ in the council’s structures and there needed to be a ‘better understanding’ of why it had happened.

He said: “Part of this for me as someone who has never been a councillor in Croydon is that it always struck me that it is not a very transparent organisation. My view is that when a public organisation, like a council, is providing services to an awful lot of people it needs to open up its data as much as possible and people in the community need to be able to scrutinise it.”


The MP said he was encouraged by the new council leader Hamida Ali’s commitment to ‘openness and transparency’. He said this lack of openness had been a problem of both Labour and past Conservative administrations.

He said going forward that the government must step in to help the council and the council had to open up more to public participation.

He said: “Members of the public are using the services and living in the community. They have the insights to form the council’s decision making. Consultation isn’t enough there needs to be shared decision making.”

He said that the council had been historically underfunded by the government and was operating on 50 per cent less than in 2010 and that it was “incredibly difficult’ to provide all the services a council wants to provide but it is ‘no excuse’ and ‘any organisation has to live within it means’.

He added: “I think the council was trying to fund ways to protect Croydon from the impact of government funds by creating new sources of income to provide for its services through some commercial investment to generate revenue. When Covid hit it had a devastating effect on the entire economy with the worst first quarter for 300 years and a catastrophic impact on the housing and building sector.

“I always had concerns about Brick by Brick and I said so to the council leader some years ago as I was worried about the lack of transparency. I wanted to see greater participation from residents with a community led board overseeing BxB.”


The council has been criticised for having the lowest reserves (just £7m) in London, failing to properly budget and making poor investments which has added to debts of £1.5billion.

The Croydon Renewal Plan, a financial recovery plan, is intended to provide assurance to the government and the people of Croydon on the implementing
of the changes required.

Labour has confirmed it will vote tonight (Weds) to save the council a whopping £300,000 by slashing councillors allowances.

As part of the Labour administration’s new priorities for ‘greater transparency and openness’ in the council’s relationship with residents it is undertaking a borough wide consultation on the savings.

It also did a u-turn on the issue of referendum for a directly-elected mayor, which was blocked by the previous leader; despite the required 20,000 signatures needed to trigger a vote. The referendum will be held in October 2021.

Residents will also have their chance to have their say on the Croydon renewal plans and saving proposals. The consultation closes on January 24 and the engagement will be included in a report to cabinet in February 2021 which will make the final decision on service cuts which are part of a three year programme of savings.

The review includes the future of ’35 council owned assets’ which will be subject to closure, rationalisation, sale, demolition or redevelopment. The council has already frozen all  non-essential spending including the monthly cost of agency staff running in to £2million and £486,000 for councillor’s Community Ward Budgets.

The Croydon Renewal Improvement Board will establish a Croydon Communities Board which will be asked to give views and suggest specific items for the Board to discuss.