Press Release – Croydon Councillor Allowances

As Croydon goes bankrupt you don’t need to worry about its councillors going short.

The TaxPayers’ Alliance have published a review of local authority councillor allowances – Councillors’ allowances 2020 – TaxPayers’ Alliance.  The report shows people who live just miles apart from each other may be represented by councillors who have similar workloads but are entitled to vastly different allowances.  This is true for the residents of Croydon.

In 2018-19 Croydon’s Councillors received a relatively modest basic allowance £11,407 for these ‘unpaid’ roles, although it should be noted this is the second highest rate in London.  What’s more alarming is when you average the total cost it comes to £21,784 per councillor.  Croydon councillors were the 11th most expensive of 398 councils across the country and the highest costing in London.

In the same time period neighbouring Sutton (£12,135) and Bromley (£12,111) were both much cheaper coming in 168th and 169th in average cost per councillor.  Croydon’s comparatively lavish allowances were being paid whilst the council’s external auditors Grant Thornton were, as recently reported, warning about low reserves and poor financial controls.  You have to wonder how they could justify these allowances whilst asking taxpayers for ever increasing amounts of money.

Since then the council has issued a Section 114 notice and gone into de facto bankruptcy.  After cutting services and making over 400 job cuts Croydon’s councillors have finally shared some of the burden.  On the 16th December Croydon’s councillors voted to reduce £300,000 from councillor pay from April 2021.  Whilst this is a welcome reduction it will still likely leave Croydon’s councillors in the top 20% best rewarded in the country and top 6 highest rewarded in London.  We ask, does this really reflect the damage Croydon Council’s poor administration has wrought on services in the borough?  Do the people of Croydon think their councillors who oversaw only the second council bankruptcy this century, deserve to be the in the top fifth for reward?

Drastic financial restructuring is needed at Croydon Council.  Services will be cut, regressive council taxes will increase, and likely more employees will lose their roles.  We commend Croydon’s Councillors for cutting £300,000 from their allowances, but this must only be a start.  Along with dramatic cuts for the citizens and staff, councillors should step up to the plate and aim to come in no higher than the average cost per councillor in London, still high for a bankrupt council but a reasonable sacrifice.

We ask Councillors Hamida Ali, and Jason Perry to work on further reducing allowances in Croydon.  Until then whatever else you worry about, as Croydon goes bankrupt, you don’t need to worry about its councillors going short.

“The staggering amount Croydon councillors were paid in allowances last year” – Story in MyLondon https://www.mylondon.news/news/staggering-amount-croydon-councillors-were-19497661

How to avoid Croydon’s fate – Harry Fone article for Conservative Home

Harry Fone the Grassroots Campaign Manager for the TaxPayers’ Alliance has written in Conservative Home, on how to avoid the fate of Croydon Council.

“Between 1997 and 2010, before the cuts, Croydon Council raised rates 13 out of 14 years, leaving it with the seventh most expensive council tax charges in London”

“Frankly, access to loans from the PWLB was all too easy. One former council leader described the process as “absolutely bonkers” having requested hundreds of millions of pounds only to receive it “three days later.”

“As Council Tax increased, both Negrini and Lacey repeatedly failed local residents, but enjoyed gold plated pay at their expense. Council leaders shouldn’t assume that paying top dollar for chief executives will benefit taxpayers. All too often it ends up costing residents dear.”

Full article: https://www.conservativehome.com/localgovernment/2020/12/harry-fone-how-to-avoid-croydons-fate.html

This follow a litany of failures by the council which resulted in the section 114 notice being issued which we write about here, a damming audit report, and years of excessive salaries and spending.

For more on Croydon Council see our other articles: https://croydonconstitutionalists.uk/category/croydon-council/

Croydon Council – Section 114 notice

Croydon Council issued a Section 114 notice on Wednesday (11 Nov) afternoon “due to the severe ongoing financial challenges facing the authority.”

News of this is being widely reported including by the BBC – https://www.bbc.co.uk/news/uk-england-london-54897296

“The Section 114 notice bans all new expenditure at Croydon Council, with the exception of statutory services for protecting vulnerable people”

“£17.7m of the £27.9m of the “new savings” presented to Croydon’s cabinet on 21 September and the full council meeting on 28 September were “incorrectly identified as new savings”

“Croydon’s financial pressures are not all related to the pandemic”. It is under a government review amid claims of “irresponsible spending”

Whilst we have been by no means alone.  In the 2 and a half years the Croydon Constitutionals have been running we have regularly reported on what we have seen as irresponsible spending by the council. 

These concerns have been validated by the recent audit report:

Mike wrote a summary of the problems for the TaxPayers’ Alliance:

All of this spending didn’t improve services for the people of Croydon:

With the TaxPayers’ Alliance and some cross party support we’ve highlighted the high rates of executive pay at the council:

Poor commercial property investments have caught up with the council. Rather as we expected them to:

We didn’t think Croydon Council got value for money for residents:

We have asked them to tax us less and even found ways to save money:

Don’t just take our word for it we’ve also interviewed Councillor Robert Ward, Councillor Jeet Bains who also spoke with us about planning in Croydon, Councillor Mario Creatura, Chris Philp MP, former Chairman of the Croydon Conservative Federation Alasdair Stewart and council candidate Jayde Edwards.

Things can change in Croydon and Mike spoke about the campaign for a Democratically Elected Mayor of Croydon at one of our events.

For more of our articles and podcasts on the council go to https://croydonconstitutionalists.uk/category/croydon-council/

Why did they not find out? – further failings at Croydon Council

By Mike Swadling

External Auditors are under a duty to issue a report in the public interest when a significant matter comes to their attention which they believe the Council should consider or the public should know about i.e. it is in the public’s interest to know about this.(Source)

Croydon Council’s external auditors Grant Thornton have issued a damning ‘Report in the Public Interest’ on Croydon’s “deteriorating financial resilience”.

The full report available at Report in the Public Interest 2020 | Croydon Council, details the past few years of the worsening financial position at the council and more worryingly the lack of response from the borough to resolve the problems, which statements like these demonstrate:

“There has been collective corporate blindness to both the seriousness of the financial position and the urgency with which actions needed to be taken”

“Had the Council implemented strong financial governance, responded promptly to our previous recommendations and built up reserves and addressed the overspends in children’s and adult social care, it would have been in a stronger position to withstand the financial pressures as a result of the Covid-19 pandemic”

I have written many times over recent years about what I saw as the council waste of public funds, be it on BoxPark, Cultural events or the Surrey Street Market refurbishment.  But these are political disagreements.  When the council has run out of reserves and is threatened with a Section 114 notice it is mismanagement, but still working withing the guidelines of the system.  With an Audit report, with the statements that follow, it is unclear if the council took notice of guidelines:

“Having a company dissolved by compulsory strike off is a failure of governance and we have not identified evidence that the dissolution of London Borough of Croydon Holdings LLP has been reported to Cabinet or the General Purposes and Audit Committee”

“Minutes of the Scrutiny Committee noted that the paper (explaining the Council’s proposed decision-making matrices) was produced after the first bid had been lodged and with this paper it would not have been possible to judge the soundness of the acquisition. Whilst opportunities can arise at short notice, good governance would require the strategy to be approved prior to the first purchase”

The full report is well worth reading, it makes 20 recommendations which we should all hope the council fully implement.  A number of themes come out in the report of systemic failure in the councils actions, which I have grouped as follows:

Lack of oversight

  • “The reports were accepted by Members without an appropriate level of challenge to continued service overspends”
  • “There was insufficient challenge from Members on the financial risks in the budget, credibility of the planned level of income from third parties and deliverability of the savings plan. The Council’s governance over the budget setting and monitoring has not been good enough.”
  • “In our view this was a failure of governance and showed a lack of understanding of the urgency of the financial position.”
  • “The strategy for investing in properties was approved at Full Council using guillotine procedures meaning there was insufficient time to discuss and challenge the strategy and the first purchase was made two months prior to approving the strategy”
  • “There has been collective corporate blindness to both the seriousness of the financial position and the urgency with which actions needed to be taken.”
  • “The budget was approved without evidence of challenge on whether the revised level of reserves was appropriate or whether the history of delivering services within the budget or delivering savings as planned had impacted on setting the appropriate reserves”
  • “it is difficult to determine how Members reached the view that the savings plan within the budget being approved was achievable. We do not consider the Council’s governance over the setting of the original 2020/21 budget to be good enough”
  • “Members of the Scrutiny and Overview Committee accepted the responses received and did not refer the matter to Full Council. In our view this did not demonstrate an understanding of the urgency of the financial position.”

Masking the problems

  • “The impact of the overspends has been masked by both the accounting treatment of the Dedicated Schools Grant deficit (which we disagree with) and the use of the flexible capital receipts. The Council has failed to deliver real savings in children’s and adults’ social care.”
  • “In 2018/19, the Council chose to account for the deficit amount as a debtor at the end of the financial year which we disagreed with as the Council’s approach was based on the view that the Government ought to refund the excess spending rather than any evidence that this would be the case.”
  • “When UASC service costs were seen to exceed the funding available, the Council’s response was to lobby government for increased funding”
  • “The 2019/20 Quarter 3 financial position reported to Cabinet in January 2020 reduced the in year overspend by £8 million. This is an unusual movement and there was limited explanation in the report and no evidence of challenge to understand the validity of the adjustments to achieve the revised position”

Lack of control of spending

  • “In the past three years, the Council has reported significant service overspends of £39.2 million within children’s and adult social care”
  • “the Council focused on: improvements in service delivery without sufficient attention to controlling the related overspends”
  • “the Council has not demonstrated that it can take effective action to either manage the cost pressures or establish appropriate budgets within Children’s and Adult Social Care services.”
  • “The Council failed to address the underlying causes of service overspends which during 2017/18, 2018/19 and 2019/20 had a combined overspend of £59.3 million. The overspends were reported in budget monitoring reports but there is little evidence of Member challenge or holding officers to account for the underlying reasons for the overspends or for taking action to address and mitigate the impact in future years.”
  • The 2019/20 Quarter 2 financial position reported to Cabinet in November 2019 showed an in-year overspend of £10.4 million. There was no indication that Members understood the implication of using the remaining general fund reserve on in-year pressures and this in our view contributed to the lack of urgency”

Brick and Brick and Investments

  • “The Council’s approach to borrowing and investments has exposed the Council and future generations of taxpayers to significant financial risk. There has not been appropriate governance over the significant capital spending and the strategy to finance that spending.”
  • “Despite heavy investment from the Council, the Council has not yet received any significant return.”
  • “The savings plan in February 2020 included additional income sources that were in our view optimistic including £3 million dividend from Brick by Brick, a company the Council has already lent almost £200 million to and for which the Council has yet to receive any dividend or any interest owing on loans”
  • “The interest receivable amounts continue to increase however the outstanding debtors indicate that Brick by Brick has not made any interest payments with £5 million owing at 31 March 2019.”
  • “The investments in The Colonnades and Croydon Park Hotel 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.”
  • “The Council has established a complex group structure and we found little evidence that the complexity and associated risk to the Council’s financial position is understood by members or officers”
  • “Based on our review of the loan agreements, £110 million of those loans were due for repayment by the date of this report and had not yet been received by the Council”
  • “At the Cabinet in July 2020, the Council made a decision to incur an additional £30 million of borrowing to purchase properties from Brick by Brick to increase the affordable housing supply available. This is not in line with the original business case for Brick by Brick approved by Members in March 2015.”
  • “The increasing complexity of the group structures, the interaction between different subsidiaries, the longer-term financial impact for the Council and how to safeguard the Council’s interests is not clearly understood.”
  • “London Borough of Croydon Holdings LLP was dissolved by compulsory strike off due to a failure to file accounts. The facts or progress in remedying the situation have not been reported to Members or subject to scrutiny”

The above are by no means all of the adverse comments in the report.

Where does this leave us?

We have a new Council Leader, a new cabinet and a new Chief Executive, all of which are to be welcomed.  All of those at Croydon Council, both Councillors and senior officer need to ask themselves how we have got into this position.  Within the new cabinet the 6 (of 10) members who are long standing cabinet members really need to step up and explain their part in these debacles.

No doubt much blame will be moved to those who have left and to the council officers.  Here I am reminded of a speech to house of commons by Diane Abbott.  Back in May 1998 the house was debating government policy towards Sierra Leone.  Ms Abbott was questioning the Labour Governments Ministers actions, and went onto say:

“In the tit for tat and media frenzy about the issue, a number of questions have been asked over and again. What did Ministers know and when did they know? I would ask a third question, which is why did they not find out?” (Source)

As the repercussions of this report become clear and further questions are raised from the newly published draft 2019/20 Annual Accounts, I expect we will see a focus on new changes, not the past problems.

To have confidence, to believe that Croydon Council will do better, what we need to know from the Councillors in office during this period and now serving in a new cabinet is simply – If they weren’t told about these problems, why did they not find out?

Croydon Council – a tale of mismanagement

As Croydon Council’s financial crisis grows Mike Swadling writes for the TaxPayers’ Alliance about Croydon Council, a tale of mismanagement.

“Northamptonshire in 2018 when they faced a £10 million shortfall and debts of around £1 billion. Croydon has just over half the population of Northamptonshire, and yet still managed to exceed this”

“Given all this overspend, Croydon’s contribution to the Town Hall Rich List seems utterly obscene. The latest report showed the council has 23 staff on over £100,000 a year and 3 who earn more than the Prime Minister”

“it’s clear the financial challenges predate the crisis. Too much money has been squandered on schemes that have not paid off. Anyone can see that too little value has been provided for the people of Croydon”

“The Growth Fund, together with the Community Ward budgets awarded by councillors, gave over £35,000 to Croydon Pride in 2018, and over £59,000 the following year. They are great events, but is it really taxpayers’ job to fund my weekend entertainment?”

Full article: https://www.taxpayersalliance.com/croydon_council_a_tale_of_mismanagement

TFL taking taxpayers for a ride!

The decade after the financial crisis has seen many front line public sector and most private sector employees receive below inflation pay rises, with many suffering years of stagnant earnings.

Not so for those at the top of City Hall, delivering value for money from the public purse is of no barrier for their earnings.  The TaxPayers’ Alliance have published their City Hall Rich List 2020 which reveals:

  • 654 people employed by the GLA and its subsidiary bodies in 2018-19 received more than £100,000.  154 received over £150,000.
  • Transport for London alone has 518 employees on over £100,000.  With 114 on more than £150,000.
  • 28 employees received remuneration in excess of a quarter of a million pounds in 2018-19.

Taxpayers have to fund this on top of all the other costly burdens of living in London., with the Mayor having increased the band D council tax precept by just under nine per cent in 2019-20.

London taxpayers are paying Limousine prices for what all too often turns out to be a Reliant Robin service from City Hall.  This is on top of the burden from London’s Borough Councils.  Croydon Council employs more than 23 staff on over £100,000 a year.  Hardworking Taxpayers need a fair deal that protects them as well as rewards staff.

We know the economy has taken a serve hit from Covid 19 and the lockdown.  We ask that City Hall and its subsidiary bodies share the burden with those who pay their wages.  We think it’s reasonable to ask that no new employee in the Metropolitan Police, Greater London Authority, London Fire Brigade or the Mayoral team, be paid more than the Prime Minister.  Those in post were employed in good faith and must retain their salaries, but surely it is not unreasonable in these troubled economic times to say a Deputy commissioner in the London Fire Brigade or a Transformation director in TFL does not need to be paid more than the person running Britain!

We calculate that if this were already the case, just capping the salaries of the top 20 highest paid staff in TFL would save over £3.9 million a year.  A good start to helping council tax payers.

TaxPayers’ Alliance full report – https://www.taxpayersalliance.com/city_hall_rich_list_2020

Coverage in South London Presshttps://pages.pagesuite.com/5/b/5be8a065-97de-4289-ae5e-fa5db3d8aed6/page.pdf

Article main image: Daring Donna

Taken for ‘grant-aid’

‘So we’ll have to stop running around spending money like drunken sailors,’ I said.

‘Well, drunk sailors tend to be spending their own money,’ Tony said. ‘By contemporary standards they’re quite prudent.’

*Quote of the day by John Lanchester, writing about the sub-prime mortgage crisis in the London Review of Books.

We have seen further coverage this week of the financial crisis in Croydon Council where:

“The council is facing a £62 million overspend and currently has £440 million worth of debt made up of short term loans.

Given its annual budget this year was £280 million, the overspend represents about one fifth of the council’s total annual spending power.”

As we have covered previously Croydon Council now has 23 staff who earned over £100,000.  16 more that Barnet council which is about the same size and 12 more than Sutton, 3 more than Bromley (which can afford this as it doesn’t have any debt).

But do we get value from these highly paid staff?  Do they provide a great service?

As part of the government’s response to the Covid-19 crisis, councils are tasked with paying out grants to local businesses under the ‘Small Business Grants Fund (SBGF) scheme’ and ‘Retail, Hospitality and Leisure Business Grants Fund (RHLGF)’.

We can now measure some of the success of Croydon Council’s high pay bill.  The government has published details of the amount of grants paid out against the initial funding, and expected number of payments.

Croydon Council has found itself in the bottom 10% of payments made by number and by amount.  Croydon having made only 77% of the payments identified and 71% by amount.  This compares to 84% and 80% on average by local authority, with 96 authorities having made over 90% of their identified payments.  Maybe they employ 24 people on over £100K?

Croydon ranks 290 out of 314 local authorities as below:

RankingLocal Authority Initial Allocationhereditaments that the local authority has identifiedgrant payments made  to hereditamentsValue of payments (£) % of value of payments% of number of payments
        
Top 3       
1City of London£14,740,000937937£15,310,000104%100%
2Westminster City Council£78,090,0004,8564,856£86,720,000111%100%
3London Borough of Ealing £68,212,0005,1105,088£69,945,000103%100%
        
290London Borough of Croydon £60,588,0004,1183,189£43,305,00071%77%
        
Bottom 3       
312Sandwell Metropolitan Borough Council£73,036,0005,8873,741£42,495,00058%64%
313Corby Borough Council£11,516,0001,240773£9,215,00080%62%
314Wigan Metropolitan Borough Council£80,860,0008,5854,593£52,875,00065%54%
        
 Average80%84%

Croydon Council is again failing local taxpayers.  These provide much needed funding to keep local small businesses going and high streets running.  Local companies including Coughlans Bakery, All Bikes, and Old Whitgift Sports Club, have come forward with concerns.  In central Croydon this is all the more important at a time the council has failed to secure the regeneration of the town centre via the Westfield development.

You can pay for quality, but questions need to be answered as to how Croydon taxpayers are being forced to pay and are still receiving services in the bottom 10%.



*With links - QUOTE OF THE DAY BY JOHN LANCHESTER, WRITING ABOUT THE SUB-PRIME MORTGAGE CRISIS IN THE LONDON REVIEW OF BOOKS.

Podcast Episode 28 – COVID Posturing, TFL Bailout, Trade Talks & an interview with Councillor Jeet Bains

We discuss the COVID posturing of various politicians, the TFL Bailout and the developing trade talks with the EU, Japan & the USA. We then have an interview with Jeet Bains, the Conservative Councillor for the Addiscombe East ward in Croydon. Jeet talks about his ward, his recent Parliamentary candidacy in Luton North, housing development in Croydon and how he believes the Tories can win back the Council. He also discusses the opportunities that Brexit can bring for Croydon.

Jeet can be found on twitter at @Jeet__Bains and for more information read our interview with him.

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Quotes from Councillor Bains.
On the Election and government:

“Jeremy Corbyn for example, he in no way represented a thing called the centre ground”

“there are just certain things the British people will not countenance, for example Marxism. However you dress it up, nobody in Britain is interested in Marxism”

“quietly privately the British people will not put up with that kind of prejudice”

“from the LibDems it was clear you need a credible leader but also someone who is believable.  For example Jo Swinson, who kept on calling herself the next Prime Minister, it just wasn’t credible it went beyond laughable”

“local action on the ground, there is no substitute for it.  It’s still really, really crucial in elections”

“the public sector, there is a bias towards caution and inaction.  That kind of thing at the best of times is not the best way to do things, but in the situation we have today could potentially be lethal”

On Croydon Council:

“contrast that with Labour.  They are allowing residential homes to be converted into flats anywhere and everywhere, and not just allowing it they are positively encouraging it”

“if you live on a road there is every chance the house next door to you will be converted into a block of flats.  We need to get that message across”

“being clear the existing folk are not monsters.  They are very understanding folk who want to accommodate more housing provision, but we can do it in the right way and in a sensitive way”

“Why has Croydon signed-up pretty much unilaterally to a far higher housing target than Bromley and Sutton?”

On Brexit:

“it requires imagination, that was point, to simply keep on saying ‘Brexit equals threat, oh my god it’s so awful’.  We’ve got to stop that, we’ve got to have, it’s an opportunity, the people have voted for it, it’s happening, stop it with the misery”

We are joined by Jeet Bains,the Conservative Councillor for the Addiscombe East ward in Croydon. Jeet talks about his ward, his recent Parliamentary candidacy in Luton North, housing development in Croydon and how he believes the Tories can win back the Council. He also discusses the opportunities that Brexit can bring for Croydon.