The Labour cabinet lead for finance Simon Hall it was claimed routinely ignored the advice of senior officers, interfered with operational matters, tried to inflate income estimates and hid the truth of the council’s dire financial situation from other cabinet members.
A member of staff told Penn that the situation had not be helped by Hall clearly thinking himself ‘financially astute’ but in the officer’s opinion he ‘was not.’
On one occasion officers were forced to pay for outside financial advice from top financial advisors Deloitte, just to persuade Hall not to invest the council’s money in buying an air hangar at Biggin Hill. When senior officers had discussed the idea it had caused ‘some amusement.’
Another former officer shared the experience of watching when Hall was interrupted at meetings, so he could be put right or challenged, that he simply paused for a moment, then carried on regardless.
“After a while people do stop trying – that may be wrong but it is what happened,” they said.
The criticism of Hall in the Penn report was damning, with both officers and councillors speaking in derogatory terms about his management style and his manipulation of the facts and truth. Hall in turn has claimed the report was “subjective” as it used anonymised interviews.
Penn was told by a member of staff that Croydon Council was strongly dominated by elected members, and members interfere with operational matters even, most probably apocryphally, at the level of who does or does not get a parking ticket.
To this officer, it seemed that everyone knows that this is the way Croydon Council works and that you have to be a ‘yes’ person if you want to progress, and that is the way to work your way up the officer structure.
The interviewee gave an example in regard to the debts of one of the companies that the council had set up. These debts were sold recently to a bank selected through ‘a very unclear process,’ but then those debts came back in to the council’s accounts as ‘income’.
This was ‘highly dubious’ in their professional opinion, they said as an accounting practice and “possible double counting”, but Hall and resources was in charge of the arrangements for this and ‘no officer had challenged it.’
Another had observed the ‘overwhelming control and influence’ Hall had over the council’s financial matters and had witnessed him telling cabinet colleagues that he would ‘sort out any problems’ so effectively stopped them and officers taking any responsibility for managing their budgets and related issues.
When the Labour councillor had been ‘curious and inquisitive’ as a cabinet member ahead of an important budget meeting in January 2020 and had asked for a briefing by the S151 officer (Chief Financial officer) – so as to be ‘properly prepared’ – Hall had said to him that this was an ‘act of disloyalty’ and ‘breach of trust.’
Another, told Penn to their knowledge Hall had attended all the Finance Review Panel meetings and had promoted a consistent strategy to sort things out – ‘just give the Borough more money as Croydon is underfunded by central government’ but had refused to look at internal issues about overspending and huge borrowing for risky ventures.
Another member of the cabinet said that when he had been told by the executive director of their portfolio that the service budget was £14million adrift, they had telephoned the former leader Newman.
The cabinet member could hear Hall in the background shouting: ‘ I told directors not to frighten their portfolios holder’ and had then the cabinet lead had been been told by both ‘there was not a problem’.
Another interviewed, went on to reveal how Hall was ‘not happy’ with the S151 officer (Chief Financial Officer) briefing other cabinet members about the council’s financial situation and that he always wanted presentations to cabinet to be a ‘double act’ as he wanted to paint the ‘rosiest picture possible’.
The interviewee said he had been told by the S151 officer that Hall had given direction to ‘burn some slides’ that had references to a S114 notice (indicating the council was on the brink of going bankrupt) contained in them.
Others interviewed spoke of the ‘council’s finances’ not being reliable or shared honestly.
One interviewee expressed concerns about behind the scenes ‘possible tampering by elected members with critical decisions, for example with Council Tax setting.
The interim deputy director of finance had told the interviewee that he had discovered that 5,000 additional properties seem to have been added to the Band D Council Tax base income calculation purposes, with no clear explanation.
Interviewee 43, said that according to members of their team, the former Head of Corporate Finance was apparently instructed by Hall to place the extra 5,000 properties in to Band D, as it would significantly increase the predicted Council Tax income and assist with budget balancing.
A Labour member interviewed about this had said this was ‘a falsehood’ and to ‘their knowledge no-one had been instructed to inflate the estimate.’
Penn raised this with interviewee 46 who confirmed they had always tried to be helpful to the administration by being ‘positive’ in the estimate of new properties and it is a fact that despite austerity and the pandemic the number of new properties in Croydon had grown ever year.
They said they had no doubt Hall would have liked ‘even more positive’ projections.
He told Penn that at a meeting with the S151 officer, Hall had wanted to increase the estimate of 3,000 properties but on that occasion he had been persuaded that they should ‘stick with the estimate’.
However, on other occasions predictions were ‘falsely inflated’ to mask underlying problems for example to falsely inflate the estimate of dividends from BxB to increase predicted income to the council.
Hall, another employee told Penn had led the council on ‘various unaffordable initiatives’ such as insourcing of social care staff at a huge cost to the council but he did not ask for advice or information about whether this was affordable or in the taxpayers interest.
He said it was this same cabinet member who made the decision to purchase Croydon Park Hotel at a price that was ‘greater than the professional valuation’ and that he ‘over-rode that advice.’
One member of the Executive Leadership Team said they had only found out about the purchase of the hotel by reading about it in the Metro newspaper.
Hall, said the interviewee had also decided that the Housing Revenue Account should be charged £14m, rather than the £12m that officers were recommending.
Another member of staff had been concerned about the apparent desire to seek to purchase more investments, despite the fact that the financial problems were intensifying and the pandemic worsening. During 201-2020 the council had borrowed £545 million without having any plan to manage the debt.
They said in simple terms there was a complete lack of commercial understanding on the part of some leading elected members.
An example of this was the hotel falling in to administration during the pandemic and the council losing its commercial rental income from it, which was in excess of £1million a year.
Their opinion was that the council’s lack of skills, competencies and commercial acumen led to its failure to deliver its strategy successfully.
Aside from resigning and being suspended from the Labour Party Hall has faced no other action.
When the report was leaked in October last year Newman and Hall issued a joint statement. Newman claimed there was “no evidence of wrongdoing” by him or Hall and said financial decisions were “made in good faith”.
Hall said: “Everyone who served as a councillor, myself included, truly regrets Croydon’s financial crisis, and the constraints it continues to put on public services and families in the borough. But it would be wrong to attribute Croydon’s problems just to spending decisions. This is also about longer-term funding shortfalls from central government, which we were powerless to influence.”