Residents in Croydon have become greatly concerned in recent weeks and months about the financial performance of the Council. As the opposition group on the Council, Conservative Councillors have been warning for the last few years about the inadequate controls put in place to ensure value for money is being achieved for the Council Tax payer.
We warned about the poor investment of Croydon Park Hotel, the unpaid loans and lack of return from Brick by Brick and the spiraling borrowing programme that has now saddled Croydon with £43m per year just in interest payments.
Instead, rather than pursuing a professional approach to budgeting and adopting at least some of the measures being recommended by Grant Thornton as the Council auditors since 2017, the now departed leadership of Newman, Butler and Hall along with the former CEO adopted a ‘fingers crossed’ strategy of hoping the Government would provide extra money to Croydon if Labour just complained about how unfair the funding was enough.
The only measures the Administration did take was to increase Croydon’s borrowing to £1.5bn and make speculative land and asset purchases that Grant Thornton in their Report in the Public Interest have said, “were not grounded in a sufficient understanding of the retail and leisure market and have again illustrated that the Council’s strategy to invest its way out of financial challenge rather than pay attention to controlling expenditure on core services was inherently flawed.”
In other words, they blew millions of pounds of your money buying stuff that wasn’t worth what they paid for it and has now gone bust.
Brick by Brick has proven to be an expensive failure; £73m of your money has been wasted in transformation projects where the point of the spending is to invest to save i.e. improving the system saves more money in the future but which Grant Thornton have stated, “The significant transformation funding indicates that the transformation funding may have been used to meet service overspends rather than to transform the services, which is not an appropriate use of transformation funding.”
These failures have a knock-on impact on the economy of Croydon. This is not just about failing the local tax payer in poorly providing Council services. The Grant Thornton report is the end of a long line of failures by the Labour-run administration starting with the failure to deliver on Westfield, a scheme that should have been open by 2017/18 and bringing 5,000 new jobs to Croydon – none of whom are now here.
The actions of the Council have cost jobs in Croydon Park Hotel and amongst the Council’s staff with 400 posts being axed including 50 Council employees being made compulsory redundant. Fewer employees mean fewer people spending money in the local economy, from shops to sandwich bars. Many of those affected are themselves Croydon residents at a time where jobs retention is under the most intense pressure possibly have ever faced.
During the current Covid crises the Government has provided various financial aid packages to businesses around the country. In Croydon, £60.6m was provided for the Council to distribute to businesses in the retail, leisure and hospitality industries.
As of October, Croydon Council still had £8m unallocated and what they did manage to allocate only got as high as it did because the Croydon business community pointed out that the Council had got its information wrong on the number of eligible firms and over 300 had missed out. This meant an extra £3m being granted in spite of the Council not because of it. The £52.6m that has been granted is just 87% of the money available. Croydon’s performance under Labour is the worst in London, worse than every Council in Surrey and in the bottom 10% of all councils in England.
Finally, Croydon town centre has a growth zone. This was established in 2018 to stimulate infrastructure investment in areas such as transport, culture and new technology. The programme operates over 16 years with the intention to create 24,000 new jobs in Croydon. It is funded by borrowing millions more from the Public Works Loans Board to increase business activity in the town centre above a base level established at the beginning. Government then lets the Council keep 50% of the extra business rates created by the growth to pay off the loans.
Reasonable in theory, if it delivers, and similar schemes are being used to deliver the Northern line extension and the redevelopment of Brent Cross. The problem comes in that the original scheme envisaged the borrowing being another £309.9m and if the town centre doesn’t expand then there are no extra business rate payments to cover the loans. Anyone who has been into central Croydon even before Covid will have seen a very quiet shopping area devoid of the footfall to be successful.
My concern for Croydon is that the current administration has proven themselves incapable of managing the finances to the point of being publicly criticized by their own auditors. Without a Westfield, that seems increasingly unlikely, Croydon will simply be saddled with yet more debt it can’t pay and yet more missed job opportunities for our residents and our town.
