Category: TaxPayers’ Alliance

With the Croydon Council having recently declared bankruptcy for the third time and planning a 15 per cent hike in council tax. The TaxPayers’ Alliance have published a deep-dive by Mike Swadling of this parish looking at how the people of Croydon found themselves in this mess, and what might happen next.

“The consequences of years of failure to control borrowing and spending by the previous administration are now being borne by the local taxpayers”

“Were it not so impactful on those who can least afford it, you could almost admire the thoroughness with which the council undertook its hatchet job on the borough’s finances”

“the council was failing to deliver on basic services. The Children’s Services department was rated inadequate. £1.1 million was spent developing Surrey Street Market but resulted in fewer traders”

“To compound all of this, London Mayor Sadiq Khan is proposing to bring most of outer London into the ULEZ zone. This will charge motorists with older, higher emission vehicles £12.50 a day for driving them”

“Spending public funds on arts that are not viable commercially or via voluntary donations as the council has been doing for years, is no less of a waste of money when it comes from someone else’s funding stream”

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

By Mike Swadling

“Our council has ruined our town centre, lost tens of millions on commercial and residential property speculation, paid hundreds of thousands if not millions, subsidising entertainment for the few, all whilst reducing core services for the many”

Our recent email bulletin started with the following statement: “We have heard once again that Croydon Council is declaring de facto bankruptcy.  This will no doubt lead to more taxes and worse services for the people of Croydon.  Regardless of whether you believe in a small, limited government (as we do) or believe the state should provide extensive support, Croydon Council is surely a salutary tale of why regardless of the overall scale, government should focus on doing less, better.  Our council has ruined our town centre, lost tens of millions on commercial and residential property speculation, paid hundreds of thousands if not millions, subsidising entertainment for the few, all whilst reducing core services for the many.  We needed them, the vulnerable people who rely on the service they provide, needed them, to do fewer things better.”

In a sorry tale of déjà vu on the 22^nd November Croydon Council again issued a Section 114 notice, declaring de facto bankruptcy.  This is the 3^rd such notice, starting in 2020, after which Croydon was granted a £120 million bailout loan by the government to balance the books.    

“The council is £1.6 billion in debt, with £47 million in annual debt repayment.”

The council is £1.6 billion in debt, with £47 million in annual debt repayment.  In the councils Section 114 report they state “The conclusion is that, in order to balance its budget, Croydon needs to reduce its spending by £130m next financial year alone (before any council tax increase) which is simply untenable out of a net budget of some £300m.”

In their Medium Term Financial Strategy report the council sets out the staggering amount of new Capitalisation Directions that may be required.

On these sums it is almost impossible to see how the council can meet its statutory requirements and save the funds necessary to balance the budget without additional help.  Whatever the path forward for Croydon it must start with realistic budgeting and basic accounting skills.  For some months, any Conservative councillor I have spoken with has been at pains to tell me the budget situation in Croydon is far worse than they expected.  Of course, some of this is politics but when you look at the figures of budget corrections it’s hard to disagree with the basic premise.

“this represents £9.5 million less for social services, libraries, local roads, swimming pools and other services.  This one mistake represents an additional £63 needed from each of the 150,100 homes in Croydon”

The level of over estimation of Parking and traffic income is clearly wrong, but unforgivable is the £9.5m a year that has been taken from the ring-fenced Housing Revenue Account (HRA).  The BBC report notes “The HRA is only supposed to be used for the authority’s social housing stock and it is from this account that maintenance and repair costs come for council homes. “What we’ve established is that there has been an overcharge of the HRA for several years,”.  This may sound like just an accounting issue, but this represents £9.5 million less for social services, libraries, local roads, swimming pools and other services.  This one mistake represents an additional £63 needed from each of the 150,100 homes in Croydon.   If this were the only mistake it might be forgivable but as the above table shows this is one of many.  No wonder in 2020 the council’s external auditors Grant Thornton described a council where “There has been collective corporate blindness to both the seriousness of the financial position and the urgency with which actions needed to be taken”.

I was pleased to be able to recently speak to the TaxPayers’ Alliance about some of the Council’s misspending.

The council is taking steps to improve the situation.  £90 million in savings have been made and £50 million of assets have been disposed of, with a further £100 million expected to be made in sales over the next few years.  The Colonnades retail park is included in this, the council purchased the Colonnades hoping to make money but will no doubt end up with a quick sale whilst still holding the debt from making the original purchase.  If only they had listened to those warning of this at the time.

Taxpayer funding of cultural events and community organisations by the council has finally reduced.  This hasn’t stopped the council being a sponsor of Croydon Pride yet again.  A great day out, but one surely not needing funding from a bankrupt council. 

“At the time of a cost of living crisis, unnecessary spending is already underway”

More worryingly in 2023 Croydon becomes the London Borough of Culture.  Funded by the Mayor of London, the “London Borough of Culture award aims to shine a light on the character and diversity of London’s boroughs and bring culture to everyone”.  At the time of a cost of living crisis, unnecessary spending is already underway as the table below from the councils records shows.

Payment Date	Vendor Name	Vendor Type	Cost Centre Description	Amount	Invoice Creation Date
23-May-22	Stanley Arts	Commercial	BOROUGH OF CULTURE	£3,000.00	25-Apr-22
23-May-22	Stanley Arts	Commercial	BOROUGH OF CULTURE	£1,500.00	25-Apr-22
08-Jun-22	Savvy Theatre	Commercial	BOROUGH OF CULTURE	£3,000.00	12-May-22
25-Jul-22	Stanley Arts	Commercial	BOROUGH OF CULTURE	£75,000.00	27-Jun-22
20-Sep-22	Fashion Meets Music Collective C.I.C.	Commercial	BOROUGH OF CULTURE	£50,000.00	07-Sep-22
28-Sep-22	Savvy Theatre	Commercial	BOROUGH OF CULTURE	£10,000.00	07-Sep-22

“There is no more expensive thing than a free gift.”

The French Renaissance philosopher Michel de Montaigne noted “There is no more expensive thing than a free gift.”  With Croydon Councils record of misallocating funds, and run away spending, Croydon’s, London’s, and the nations taxpayers who are bailing out the council have plenty of reason to worry. 

Croydon Mayor, Jason Perry has noted “Even with Government support, the coming years will be incredibly financially challenging for Croydon Council. We must balance our books and become a much smaller organisation.”  Maybe a good way to start would be for him to politely decline to waste more taxpayers cash on the London Borough of Culture award.