The Penn report was an independent investigation looking into the reasons for the Croydon Council’s financial collapse, published on 24 February 2023. Further details on the report can be found on Croydon Councils’ website, along with the report itself. Extracts of the report can be found below.
Richard Penn is a former Chief Executive of the Metropolitan Borough of Knowsley , Chief Executive of Bradford City , Commissioner for Standards for the National Assembly for Wales, and has filled many other senior roles.
The report is 143 pages long, and below are some extracts, which make worrying reading. Following an additional as yet unpublished report Croydon Council has announced “it will be taking unprecedented action to hold former senior leaders to account for misconduct, wrongdoing and failures in governance that contributed to the authority’s financial crisis.”.
The unedifying details below are given some context from the below quotes from the conclusion section.
- “This report is a faithful record of a wide range of views about ‘how the Council came to this point’ from the perspective of a number of the Council’s elected members (from both political parties), many of its senior managers and staff, as well as some external partners.”
- “A total of 64 individuals gave their professional views, their personal observations, beliefs and comments to me during my investigation. I found these views, observations, beliefs and comments to be genuinely held and sincerely expressed.”
- “I accept that there may well be other perspectives that could help make the portrait more complete. And it needs to be made clear again that this report does not reflect the formal views of the London Borough of Croydon as to what took place. It is not a statement of fact but the separate narratives of 64 individuals about what they saw taking place that led the Council to be in the situation in which it now finds itself.”
All quotes are shown in their section of the document and with reference to their place in the original source.
My Investigation
The key question that my investigation is designed to answer is, ‘how has LB Croydon got into the situation as described in Section 2 above’ {Issuing of a Section 114 Notice, and Auditors Report in the Public Interest}: and based on my findings, to offer some analysis and explanation to aid the necessary organisational learning and any additional Croydon Renewal Improvement Plan actions.
Section 3.3, Page 8
“there are no formal records or details that anyone was ‘keeping an eye ’on the £200 million of legal loan agreements to Brick By Brick”
Governance
there are real concerns about the governance arrangements in Croydon. In particular, there are issues about record keeping by the Council. An example of this is that allegedly there were discussions about the proposed investments in the Croydon Park Hotel and yet there is no record that could be found of those discussions. Interviewee 48 had been told by the (former) Director of Finance that there was a record of the discussion that took place of the risk assessment of major investments by the Council but Interviewee 48 said that the (current) Director of Finance has not been able to find the formal record of any such discussion. In Interviewee 48’s opinion that is simply not good enough when significant public money (circa £30 million) is being invested. Linked to this is that there are no formal records or details that anyone was ‘keeping an eye ’on the £200 million of legal loan agreements to Brick By Brick, and ensuring that the returns
Section 4.4, Page 11
Interviewee 47 (external to the Council) told me that the Labour Group members on the Governance Panel were concerned with involving back-benchers more in decision making, and the Conservative Group members believed that things were being hidden from them, and that they found out about what was happening much too late.
Section 4.6, Page 13
had a succession of Chief Executives who in Interviewee 4’s view became ever more political to the extent that, until fairly recently, it has been difficult to tell officers and members apart. The Labour Administration in 2014 accelerated this pattern, and Interviewee 4 stated it has become even more the case since the last local elections in 2018.
Section 4.11.2, Page 17
This was exemplified in Interviewee 8’s opinion by what had happened with Brick By Brick where leading members were taking decisions without details of any reference to due process. Interviewee 8 also commented that there seemed to have been a reluctance by some senior officers to publicly or privately question, challenge or disagree with what the (former) Leader and the (former) Chief Executive wanted to happen.
Section 4.15.1, Page 18
“then for the next two years Brick By Brick asked for more and more money and was given this it appears, without due reference to the loan agreements or any apparent formal governance”
Based on the documents that Interviewee 8 had seen, until 2018 things did seem to happen in line with the loan agreements but then for the next two years Brick By Brick asked for more and more money and was given this it appears, without due reference to the loan agreements or any apparent formal governance that Interviewee 8 has been able to discover. Those senior officers, who by normal local government operating practices should have raised challenges, queries or even disagreement with this practice, without information to the contrary seem to have acted as silent bystanders or had been compliant with these abnormal practices.
Section 4.15.2, Page 18
“the husband and wife combination in the Cabinet managing the Planning and Housing portfolios respectively had, in the opinion of Interviewee 13, an ‘insatiable drive’ to build houses”
The Cabinet
Ahead of a really important budget meeting in January 2020 Interviewee 10 had asked for a briefing by the (current) S151 Officer so as to be properly prepared to debate the draft budget. But when the (former) Cabinet member for Finance and Resources found about this request for a briefing he expressed his anger to Interviewee 10 and had said to Interviewee 10 that this was an act of disloyalty
Section 5.5, Page 20
Interviewee 12 (a former and/or current member of the Cabinet or Committee Chair) told me that the former Cabinet had been dominated by a small group of Cabinet members who took decisions before and sometimes not even at Cabinet meetings. This was allowed to happen because the rest of the Cabinet did not question or challenge and failed to speak up even when they could see that things were not right
Section 5.7.1, Page 21
Interviewee 12 also stated that Cabinet as a whole was not really involved in decisions like the purchase of the Croydon Park Hotel. Cabinet was told about the idea and the potential of a £1m+p.a. income stream one week, and then shortly afterwards was told it had been purchased.
Section 5.7.5, Page 22
Another problem in Interviewee 13’s view was that the husband and wife combination in the Cabinet managing the Planning and Housing portfolios respectively had, in the opinion of Interviewee 13, an ‘insatiable drive’ to build houses and this working relationship may have led to poor governance behaviour.
Section 5.8.1, Page 22
Interviewee 13 also expressed the view that the (former) Leader surely should have wanted to build a Cabinet of the most able people in the Labour Group, but Interviewee 13 had seen that too many members of the previous Cabinet would not, or could not, provide adequate challenge. This sometimes resulted in poor decision making; such as with the Compulsory Purchase Orders being issued to a local shopping mall, forcing owners out of their shops almost overnight in preparation for a Westfield development which years later has still not arrived. It was decisions like this in Interviewee 13’s opinion that have brought the Council in to disrepute.
Section 5.8.2, Page 23
Interviewee 14 described the personal shock felt at the purchase of the Croydon Park Hotel and the Colonnades, and that the Croydon Park Hotel purchase was not discussed by or with the Cabinet before it happened. Interviewee 14 had asked another member of the former Cabinet how this could have happened and had been told that if you questioned anything that the political Leadership was doing you were regarded as the ‘enemy within’…… Interviewee 14 had been stunned to find out that this Asset Investment Strategy had been formally agreed at Cabinet only after the Croydon Park Hotel purchase.
If only people raised concerns at the time. Oh hang on, we did https://croydonconstitutionalists.uk/just-do-your-job-right/.
Section 5.9.2, Page 23
Interviewee 15 said to me that there is a misconception that the (former) Cabinet member for Finance and Resources was running things. In Interviewee 15’s opinion he very much did the (former) Leader’s bidding and also in Interviewee 15’s opinion the (former) Leader’s style was always to get someone else to do his ‘dirty work’ so that he could show ‘a clean pair of hands’.
Section 5.10.4, Page 24
In Interviewee 16’s view there has been a lot of opposition to what the Council has done from the business community in Croydon as well. They had needed financial support and had objected strongly to the Council spending £30m to purchase the Croydon Park Hotel, but the (former) Cabinet member for Finance and Resources, in Interviewee 16’s opinion, had refused to talk with the businesses to explain what the Council was doing.
Section 5.11.3, Page 25
Interviewee 20 said that every Cabinet meeting since February 2020 had seen Opposition members ask questions about the sustainability of the Council’s finances, the levels of borrowing etc., and the response 27 from the (former) Leader of the Council had been to attack Interviewee 20 personally, claiming that these questions were scaremongering and so on.
Sections 5.15.1 and 5.15.2, Pages 26 and 27
“informal reports of the (former) Chief Executive’s apparent bullying attitude towards junior members of staff appeared to be growing, particularly over the last 12 months including allegedly shouting at the Council’s external auditors”
The Executive Leadership Team
Interviewee 10 also said that there are now accounts from junior staff through webinars about the (former) Chief Executive’s inappropriate conduct, such as shouting and swearing.... Interviewee 10 described meeting with the (former) Chief Executive on a number of occasions and had personally found her very unpredictable.
Section 6.4, Page 29
Other members of ELT had been talking to Interviewee 1 about the (former) Chief Executive’s management style. Interviewee 1 had been made aware of the (former) Chief Executive’s management style towards members of ELT that was described to me by Interviewee 1 as a ‘strong and controlling style’. But until the (former) Executive Director had spoken to Interviewee 1 about this, nobody had been prepared to go on the record. With regards to more junior members of staff, again no formal reports were made to Interviewee 1, but informal reports of the (former) Chief Executive’s apparent bullying attitude towards junior members of staff appeared to be growing, particularly over the last 12 months including allegedly shouting at the Council’s external auditors
Section 6.9, Page 31
Interviewee 28 (a member of the Executive Leadership Team) said that it appears that most of the ELT members are lacking in confidence. In Interviewee 28’s view they are extremely well- paid, but they do not appear to add much value to the change agenda currently, as quite understandably they are preoccupied at the moment with their personal futures…. there is no excuse when you reach this level in an organisation to be neglectful of the need to apply the Nolan principles nor to claim a lack of understanding and commitment to what corporate and collaborative working as a Team means in practice.
Section 6.24, Page 35
“witnessed the (former) Chief Executive bully a member of a team but did not raise this direct with her but instead raised it with another (current) Executive Director for Place a couple of times, but overall the behaviour did not change”
Interviewee 32 (a member of staff) had witnessed the (former) Chief Executive bully a member of a team but did not raise this direct with her but instead raised it with another (current) Executive Director for Place a couple of times, but overall the behaviour did not change. Interviewee 32 was also aware that members of ELT also witnessed this bullying but did not step in to support Interviewee 32 or the staff member in the meeting.
Section 6.29, Page 37
it became clear that two of those involved in the focus groups had witnessed or been told by one of their colleagues that bullying was occurring at meetings between the highest level senior Executives, that this was occurring regularly on the office floor in close proximity to where those individuals were located, and that it appeared to these members of staff as if this behaviour was being both trivialised and normalised.
Section 6.31, Page 38
“the (former) Chief Executive created an image of herself as a compassionate and caring individual which was in direct contradiction of the experiences that emerge from those who worked with her”
Interviewee 33 was clear that this behaviour is in breach of the Council’s Code of Conduct for staff and is against the Council’s policies for Dignity in the Workplace. It seems to Interviewee 33 that no (current) member of ELT nor the (current) Director of Human Resources was apparently willing to deal with these concerns about the (former) Chief Executive’s behaviour and elected members either were not aware of it or were not willing to deal with it either. In Interviewee 33’s personal opinion, the (former) Chief Executive created an image of herself as a compassionate and caring individual which was in direct contradiction of the experiences that emerge from those who worked with her.
Section 6.32, Page 38
there was always a lot of shouting by the (former) Chief Executive including shouting at Interviewee 34 about the Corporate Plan because she did not like what she was being told. Any Executive Director who disagreed with her did not last long although the (current) Executive Director of Adult Social Services had appeared to stand up to the (former) Chief Executive and had then chosen to move away from the rest of ELT and work from a different floor in BWH as part of his ‘survival’.
Section 6.33, Pages 38 and 39
“the (former) Leader prescribed the choice to use The Campaign Company for community consultation work even though the chosen company was run by a (former) Cabinet member’s ex-partner and employed her son”
the (former) Leader prescribed the choice to use The Campaign Company for community consultation work even though the chosen company was run by a (former) Cabinet member’s ex-partner and employed her son. Whilst this was declared, the question was raised for Interviewee 34 as to whether this was acceptable conduct.
Section 6.34, Page 39
Interviewee 35 told me that when attending the ELT meeting on 9 November 2020, chaired (for that part of the meeting) by a (current) Executive Director in the absence of the (current) Interim Chief Executive, there had been a ‘throw away’ comment made at the start of the meeting by the Chair saying ‘15 minutes on risk management is all that I can stand’. Whether or not the comment was meant to be light-hearted, Interviewee 35 was very disappointed, particularly because no member of ELT questioned or challenged this remark by the Chair given the serious position the Authority is in.
Section 6.38, Page 40
after the local elections in May 2018, the (former) Chief Executive was in Interviewee 1’s view conducting herself in a very different way. She had made it very clear to Interviewee 1 that she did not like the idea of the Council being ‘member led’. In interviewee 1’s opinion she became obsessed with being called Head of Paid Service, and also resented what she described as member interference.
Section 7.4, Page 46
In Interviewee 11’s opinion there had been considerable information withheld by officers of the Council, including: the scale of overspend in 2019/20 the state of the Finance Team (i.e. how weak it was) the striking off of London Borough of Croydon Holdings LLP the breach of treasury management limits details of loans to Brick By Brick.
Section 7.12, Page 48
An example of officers enabling this can be seen when the (former) Leader in 2014 was able to claim additional Leader’s Allowance without making a public announcement. In Interviewee 19’s view officers facilitated this, and this additional £11K claim only came to light following the 2014 local elections.
Section 7.15, Page 49
“in Croydon nobody seems to be responsible for anything and no one seems very concerned about that”
Interviewee 40 accepts that being a member of the Opposition makes things different but believes that having asked for something – a report, some information, some advice – it is rarely provided and in Interviewee 40’s experience excuses such as ‘I will have to get permission’, ‘the person who knows is on leave’ are used. Interviewee 40 has raised and pointed out many failings by the Council, for example that there are poor job descriptions for Cabinet members or there is no clarity of responsibility and accountability for what it actually means for elected members to be Corporate Parents. In Interviewee 40’s opinion, in Croydon nobody seems to be responsible for anything and no one seems very concerned about that.
Section 7.18, Page 50
It has struck Interviewee 23, following an LGA session about Council commercial initiatives that Interviewee 23 attended, that Croydon has not been doing anything unusual in setting up Brick By Brick or purchasing a shopping mall. However, the many other local authorities that have been doing similar things to produce valuable income streams for their Councils have been doing it right, assessing the risks, getting the right governance arrangements in place. Lots of Councils are making it work really well, so Interviewee 23 wonders why Croydon got it so wrong.
Section 7.25, Page 51
If a private company was considering whether to invest £190m in a new project it would commission a coherent due diligence assessment to identify risk and what processes were required to ensure it worked. Interviewee 38 said in their view that this has not been the Croydon approach and that there has been no investment in building commercial expertise in the Council (or buying it in) so it was not possible to test the business case nor to commission any appraisal by officers before the Cabinet committed to a project
Section 7.38, Page 54
“In Interviewee 46’s opinion it was this Cabinet member who had made the decision to purchase the Croydon Park Hotel at a price that was greater than the professional valuation. To Interviewee 46’s knowledge he overrode that professional advice.”
Interviewee 46 told me that the (former) Cabinet member for Finance and Resources had led for the Council on various unaffordable initiatives such as the 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. In Interviewee 46’s opinion it was this Cabinet member who had made the decision to purchase the Croydon Park Hotel at a price that was greater than the professional valuation. To Interviewee 46’s knowledge he overrode that professional advice. Interviewee 46’s opinion was also that the (former) Cabinet Member for Finance and Resources had decided that the HRA should be charged £14m rather than the £12m that officers were recommending, and this was done without any challenge or scrutiny.
Section 7.41, Page 55
Interviewee 39 (external to the Council) told me to their knowledge that the (former) Cabinet member for Finance and Resources had attended all of 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’ – and had refused to look at internal issues about overspending and huge borrowing for risky ventures.
Section 7.44, Page 56
” Deloittes had had to be brought in (at cost) to persuade the (former) Cabinet member for Finance and Resources that it was not a good idea to invest in an aircraft hangar at Biggin Hill”
Financial management
Another example Interviewee 49 shared with me was that Deloittes had had to be brought in (at cost) to persuade the (former) Cabinet member for Finance and Resources that it was not a good idea to invest in an aircraft hangar at Biggin Hill as he would not accept the professional advice of Council officers.
Section 8.5.3, Page 63
Interviewee 49 said they had been told that the (former) Cabinet Member for Finance and Resources always wanted to paint the rosiest picture possible and Interviewee 49 was aware that he had been heard to say things like - ‘don’t tell them how bad it really is or that it’s getting worse’.
Section 8.5.4, Page 63
Interviewee 46 said that it was the (former) Cabinet member for Finance and Resources and the (former) Leader who had put a number of new initiatives together without the necessary professional advice and without having them costed. There seemed to be no concern whether any of these initiatives were affordable so, for example, the introduction of the London Living Wage - a great thing to do in principle - was never costed and never assessed for its affordability.
Section 8.8.3, Page 69
If only someone had raised concerns about this at the time.. Oh hang on, we did. https://www.webarchive.org.uk/wayback/archive/20190509001640/https:/thecroydoncitizen.com/economics-business/priced-croydon-job-market/
Interviewee 46 told me that a £60m budget ‘gap’ is simply unmanageable and the response of officers in their opinion had been to say that it really is not their problem which they cannot make a significant contribution to solving and that something else will have to happen – probably more borrowing.
Section 8.8.5, Page 69
“build reserves and not do all the ‘shiny new things’ without making sure they were affordable. There was no corporate or coherent approach taken to manage the Council’s financial situation responsibly”
Interviewee 14 said that what they should have done was manage the budget much better over the years, build reserves and not do all the ‘shiny new things’ without making sure they were affordable. There was no corporate or coherent approach taken to manage the Council’s financial situation responsibly and members should have looked more critically at whether to take the hard decisions like discontinuing or reducing support for activities such as supporting UASC if the administration wanted to set up companies and buy hotels.
Section 8.12, Page 73
The election manifesto in 2014 was very ambitious despite the ‘Graph of Doom’ forecast and the new administration had been pleased that officers were committed to delivering as many of the manifesto commitments as possible. Interviewee 41 commented that with hindsight the manifesto was maybe too ambitious
Section 8.15.3, Page 74
It seems to Interviewee 29 that Croydon has always focused on the ‘shiny’ things and not on basic stuff like financial management. Interviewee 29 said that there is no standard approach to financial accounting at Croydon and Directorate accountants each have a different approach to budget setting and control.
Section 8.20, Page 76
“At one point Interviewee 37 was funding pretty much the whole of the Environmental Health Department through a budget which is explicitly not to be used for mandated services.”
At one point Interviewee 37 was funding pretty much the whole of the Environmental Health Department through a budget which is explicitly not to be used for mandated services. Interviewee 37 had been distressed that for the first time in a nearly 40 year local government and NHS career Interviewee 37 could not say where the budget was so it could not be managed or controlled. No one seemed particularly perturbed about this as it appeared to be the normal Croydon way of doing things.
Section 8.23.2, Page 78
Interviewee 50 (a member of staff) said that there had been a huge loss of trust amongst trade union members as a result of the disastrous financial situation and its consequences for both staff and the wider community. What is now needed above all is openness and transparency about how the Council got here.
Section 8.25, Page 79
The whole financial situation was riddled with risk, particularly around the companies that the Council had created like Brick By Brick, there were issues around capitalisation and unrealistic expectations about the extent of external funding. Combine all that with significant overspending by Children's Services and Adult Services and in Interviewee 9’s opinion the Council was clearly in deep trouble.
Section 8.28.2, Page 81
From memory, Interviewee 9 recalls that she was specific that the (former) Chief Executive was not financially ‘literate’ and that effectively the (former) Leader and the (former) Cabinet member for Finance and Resources had total control of the situation in which the (former) Chief Executive was essentially a compliant player delivering their instructions.
Section 8.28.3, Page 81
Interviewee 39 said the fact is that in their opinion the (former) Chief Executive was not competent to deal with what was facing her, and neither was her ELT or the (former) Cabinet members.
Section 8.29, Page 82
“they had first been alerted to the Council’s financial problems at a Labour Group meeting in May 2020. There was a Cabinet meeting a week later which seriously underplayed the problems compared to what had been said at the Labour Group meeting”
Scrutiny and Overview
Interviewee 48 observed a Scrutiny Panel meeting in August at which Panel members were frustrated by the lack of papers. The right questions were being asked but the right answers were not being given which led to members having to make freedom of information requests to get proper answers.
Section 9.7, Page 88
Interviewee 19 said that they had first been alerted to the Council’s financial problems at a Labour Group meeting in May 2020. There was a Cabinet meeting a week later which seriously underplayed the problems compared to what had been said at the Labour Group meeting.
Section 9.8.1, Page 88
Interviewee 40’s requests for information/documents had always been met by passive/aggressive behaviour – ‘you don’t need it, you are not entitled to it etc’. Interviewee 40 said that (former and current) Cabinet members and (current) Executive Directors have long been party to a culture that prevents elected members and others getting the information they need.
Section 9.9.1, Page 89
“It would be a breach of his statutory duty if he amended the Report. For the next 20 minutes the (former) Chief Executive in Interviewee 36’s opinion just ‘ranted and raved’ while the rest of the current ELT said nothing”
Risk management/assurance
Interviewee 40 (a member of the Opposition Group) said that General Purposes and Audit Committee (GPAC) meetings have traditionally not been ‘political’ but until recently the (former) Cabinet member for Finance and Resources had attended meetings although he was not a member of the Committee, and he was always the first person to answer questions from members or the external auditor so officers found it very difficult to give a different response and just kept quiet. Interviewee 40 said that in their view this effectively shut down any debate or open discussion of important issues. More recently as the (former) Cabinet member was no longer attending GPAC meetings, there is a very different atmosphere as the scene is not set by political responses and officers in Interviewee 40’s opinion now have more freedom to answer questions truthfully.
Section 10.11, Page 97
Interviewee 30 said that it had been one of the most unpleasant meetings in a 40+ year career. Interviewee 30 felt abused at the meeting by the (former) Chief Executive who claimed that what Interviewee 30 was saying in the Report was totally new to her and she instructed Interviewee 30 to change the Report. Interviewee 30’s line manager, the (current) Director of Finance who was present at the meeting, told ELT that Interviewee 30 could not be instructed to change the Report and it was subsequently published and discussed at the GPAC meeting in October 2020. No member of ELT other than the (current) Director of Finance gave Interviewee 30 any support at the earlier ELT meeting
Section 10.1.13, Page 97
Interviewee 35 described what had happened at the ELT meeting on 2 September 2020, just before the (former) Chief Executive left the authority. Interviewee 35 had attended the ELT meeting with the (current) Head of Internal Audit to support the presenting of reports on the Annual Governance Statement and the Internal Audit Report respectively both of which would be on the GPAC agenda at its meeting on 7 October 2020. It was an awful occasion, the worst Interviewee 35 had ever experienced. In Interviewee 35’s opinion, the (former) Chief Executive was very angry and said that this was the first time that she had been made aware of the issues raised in the (current) Head of Internal Audit’s Report and the failures of governance and internal control that it highlighted. Interviewee 35 could not see how this could be the case as the (former) Chief Executive would have been aware of the increasing number of limited or no assurance internal audit reports over a number of years from previous annual reviews in the Head of Internal Audit’s Reports or reports from the Council’s external auditors. The (former) Chief Executive did not allow the Head of Internal Audit the opportunity to make a proper response to her claim that she had never been advised about any of this. In relation to the Annual Governance Statement Interviewee 35 was asked ‘where are the areas of risk to prioritise?’ to which an explanation was given that ‘they are there for you, in Tables 1 & 2 of the Statement’. The rest of ELT made no challenge to the (former) Chief Executive’s claims or the way that she was talking to Interviewee 35, and appeared to Interviewee 35 by not speaking out to be supporting her stance.
Section 10.15, Page 98
when the draft Statement was presented to ELT (along with the Head of Internal Audit’s Annual Report) on 29 July 2020, the (former) Chief Executive became very frustrated when she saw the ‘limited assurance’ applied by the Head of Internal Audit. She requested that he change his reported assurance level and he said that he could not do this as it is related to financial year 2019/20 and it was based on the results of the internal Audit Programme. It would be a breach of his statutory duty if he amended the Report. For the next 20 minutes the (former) Chief Executive in Interviewee 36’s opinion just ‘ranted and raved’ while the rest of the current ELT said nothing and just sat there, one (current) ELT member even endorsing the (former) Chief Executive’s request.
Section 10.18, Page 99
“the culture of the organisation became one that rewarded those people who did not adhere to the principles of effective risk management and to demean those who did”
Interviewee 36 said that the culture of the organisation became one that rewarded those people who did not adhere to the principles of effective risk management and to demean those who did. Increasingly during the (former) Chief Executive’s time at Croydon the organisation failed to understand or to respect the importance of good governance and effective risk management and compliance with the Council’s policies and procedures.
Section 10.21, Page 100
“o high levels of tolerance for poor organisational performance. There simply is no evidence of the organisation holding people to account for what they do and how they do it”
Performance management
A number of those interviewed in this investigation pointed to high levels of tolerance for poor organisational performance. There simply is no evidence of the organisation holding people to account for what they do and how they do it, and there is an absence of constructive challenge.
Section 11.1, Page 102
“a separate team worked with the ELT to produce a set of Key Performance Indicators (KPIs) that bore no relationship to the Corporate Plan that had been adopted”
The Plan was written with strong direction from both the (former) Leader and the (former) Chief Executive, but then a separate team worked with the ELT to produce a set of Key Performance Indicators (KPIs) that bore no relationship to the Corporate Plan that had been adopted. Nine months later a progress report on implementation of the Plan was prepared for the Cabinet but the (former) Leader and (former) Cabinet Members were very unhappy that any KPI should be shown as ‘red’ (i.e. not implemented) in the rating system used.
Section 11.4, Page 102
“the paper explaining the Council’s proposed decision-making matrices was produced after the first bid had been lodged and without this paper it would not have been possible to judge the soundness of the acquisition”
Asset investment
The minutes of the Scrutiny and Overview Committee noted that the paper explaining the Council’s proposed decision-making matrices was produced after the first bid had been lodged and without this paper it would not have been possible to judge the soundness of the acquisition. The RIPI pointed out that whilst investment opportunities can arise at short notice, good governance would require the investment strategy to be approved prior to the first purchase.
Section 12.4, Page 104
“The investments in The Colonnades and Croydon Park Hotel were not grounded in a sufficient understanding of the retail and leisure market”
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 appeared to be to invest its way out of financial challenge rather than pay attention to controlling expenditure on core services. This was inherently flawed.
Section 12.5, Page 105
Interviewee 48 told me that there are real issues about record keeping by the Council. A key example of this is that allegedly there were discussions about the proposed investments in the Croydon Park Hotel and yet there is no record that can be found to pass to Interviewee 48 of those discussions..... Linked to this is that there is no detail that anyone was keeping an eye on the loans to Brick By Brick and whether the promised returns would materialise – nobody seems to have been responsible at the Council for monitoring things like this.
Section 12.13, Page 110
By way of example, Interviewee 53 said that this resulted in a S106 agreement sitting on someone’s desk at the Council for 11 months just waiting to be signed off, which ended up costing the company, and therefore the Council, more than £800k.
Section 12.21, Page 112
The Council has had two non-Executive Directors on the Board of Brick By Brick, first the (current) Director of Finance who then was replaced by the (current) Executive Director for Place. That had reassured Interviewee 1 at the time, but Interviewee 1 now knows that there was no reliable feedback coming to the Council about the serious financial issues with the company. Interviewee 1 stated that no one was telling the Cabinet that Brick By Brick was heading for serious trouble.
Section 12.24, Page 112
Interviewee 19 had been surprised to find out that the strategy was to set up commercial enterprises to produce income streams to compensate for the loss of other income. Some of these initiatives, for example the purchase of the Croydon Park Hotel, were never discussed fully with Labour Group members, they just happened. The Croydon Park Hotel purchase was called-in in August 2018, and when Interviewee 19 reviewed the papers as part of the preparation for the meeting it was clear that there were no strategy or policy papers to explain or justify the purchases.
Section 12.27, Page 113
“In simple terms there was a complete lack of commercial understanding on the part of some former leading elected members. A good example of this, based on observations, was the decision to buy a hotel during 2018”
In simple terms there was a complete lack of commercial understanding on the part of some former leading elected members. A good example of this, based on observations, was the decision to buy a hotel during 2018. During the pandemic, the hotel fell into administration and as a result the Council lost its commercial rental income from it that was in excess of £1 million per year. In hindsight, it seems to Interviewee 44 to have been a questionable investment because the Council may have paid too much for the hotel. Whilst the hotel has obvious development potential, the Council has limited means to exploit that potential and in reality the hotel has caused further strain on the Council’s finances.
Section 12.47, Page 119
“said that there is a lot of nepotism at the Council and a lot of people being well rewarded for their failure. It is clear to Interviewee 50 that there has been a lot of financial mismanagement but no action has been taken.”
The culture of the organisation
Some people talked about a ‘them and us’ culture rather than a culture of ‘One Organisation’. There was no sense that colleagues from other parts of the Council were customers; indeed, some managers from other parts of the Council said they felt strongly that the Resources Directorate behaves as if it is doing them a favour rather than treating them as customers.
Section 13.1, Page 122
Someone said that ‘Croydon is like a garden that has become overgrown. It now resembles a jungle that can feel too big and daunting to begin to tackle’. It was interesting to hear from staff who had come from other Councils and who had been taken aback at the lack of clear processes, a rigorous performance culture and accountability, with one person suggesting it had felt a bit like ‘the Wild West’.
Section 13.2, Page 122
Section 13.5, Page 123
Section 13.6, Page 123
Interviewee 36 (a member of staff) said that the political leadership of the Council, the (former) Cabinet, the (former) Chief Executive and the (current) ELT, appeared to be predominantly focused and only interested in three key areas. First, politics (‘we only want good news stories’); secondly, initiatives in the external environment such as Brick By Brick; and thirdly, the drive to get the next Ofsted judgement to ‘good’. Everything else the Council did was seen as peripheral and did not fit the narrative, including good governance and effective risk management.
Section 13.9, Page 124
Interviewee 50 (a member of staff) said that there is a lot of nepotism at the Council and a lot of people being well rewarded for their failure. It is clear to Interviewee 50 that there has been a lot of financial mismanagement but no action has been taken. It seems to Interviewee 50 that some people are appointed to the most senior positions and then they are told to stay silent and not raise any issues or concerns. There has been a bullying culture at the Council that is denied if people raise any concerns
Section 13.25, Page 128
“trade union members want to see the people responsible for the Council’s situation properly held to account for their failings and subject to exactly the same procedures as applies to ordinary employees of the Council”
Interviewee 50 told me that trade union members want to see the people responsible for the Council’s situation properly held to account for their failings and subject to exactly the same procedures as applies to ordinary employees of the Council. It is the case that ‘heads must roll’ and must be seen to roll in order to give Council staff the trust and confidence that things are going to improve for the future.
Section 13.26, Page 128
” This dysfunction seems to stem from poor governance by the former political leadership of the Council and by correspondingly poor managerial leadership from the Council’s most senior officers”
Conclusions and recommendations
when these comments are shorn of any rhetorical excesses, when they are triangulated and then synthesised, a picture of organisational dysfunction at the most senior level in the Council emerges. This dysfunction seems to stem from poor governance by the former political leadership of the Council and by correspondingly poor managerial leadership from the Council’s most senior officers. It would appear that those with the biggest responsibilities and with statutory duties let the organisation down.
Section 14.3, Page 129
And by seeming to encourage overly positive news while appearing to avoid unwelcome and inconvenient feedback, including feedback that was grounded in the reality of service outcomes and staff experience, it appears that the Council’s political and managerial leadership failed to focus on the real budgetary crisis that was enveloping them. ‘Collective corporate blindness’ was the term used by the Council’s external auditors, and the majority of people that I interviewed agreed with that description.
Section 14.4, Page 129
these interviews revealed a highly dysfunctional organisation characterised by a culture of poor decision-making and conduct of some of the Council’s most senior managers. This is evidenced, among other things, in the belief that needing to be ‘fleet of foot’ meant that public money could be spent without due regard to public decision-making and internal managerial and financial controls. This included, again among other things, seemingly no formal officer governance controls being in place in respect of loan agreements in excess of £200m
Section 14.5, Page 129