Following your local council’s finances is probably not top of many peoples ‘to do’ lists, but here in Croydon there is a very worrying trend that could have a huge impact on all of our lives.
Most people are aware that since the financial crash the purse strings of local government have been held very tight. Austerity became a common word and the battle to put the national finances back on an even keel placed huge pressure on many areas of public spending.
The way local councils have dealt with these pressures, however, can vary immensely. In Croydon the current Labour administration are struggling to cope and as each year passes the situation is becoming more and more unstable. If it all falls apart, it is Croydon’s tax payers and service users that will suffer. Croydon is far from unique in the pressures it is facing but the current combination of issues in how Cllr Newman and his team are trying (and failing) to deal with them is a huge cause for concern.
Firstly, there is the issue of blame. No one in local politics disputes that government spending restrictions are placing significant burdens on local authorities. To be blunt, as local Councillors, there is little we can do about this. We have to play the hand we have been dealt. Croydon Labour however now caveat every overspend they make with an excuse that it is central government’s fault. If you don’t take responsibility for what is happening, you will not be able to deal with it. The overspends are going up and the excuses are getting longer.
Second, there is the level of council reserves. For an organization as large as Croydon Council it is essential that reserves are available to smooth spending and be able to respond quickly at times of crisis (such as the riots). Croydon Council now has just under £25m in reserves. This may sound a lot but if you look at it in comparison to other councils it is the second lowest in the country and still falling! Should we suffer a significant financial shock in the near future the current reserves may well not be enough.
Thirdly, there is council borrowing. Every year the total borrowing of Croydon council is going up and at an alarming rate. Next week they are set to approve themselves another increased borrowing limit of an eyewatering £1.8bn! Yes, you read that right, they set their own borrowing limit. Labour’s policy of borrowing to create income by speculating on the property market is fraught with risk. Selling council land to their own private development company at prices well below market rate is creating the circumstances for a devastating collapse should the housing market drop. Could they cope? Go back and read the previous paragraph again! Put these together and we have the unenviable situation of a council that is overspending, has very little savings left and is borrowing more and more. This is NOT sustainable. Croydon Labour need to get a grip on our council’s finances and accept that no matter what the pressures it is they who are making the decisions and it is they who will be held accountable for where it ends.