Croydon Council’s external auditor will imminently issue a ‘report in the public interest’, with devastating criticisms of how the Council’s finances have been mismanaged by Croydon Labour since 2014.
This damning report will lift the lid on Labour’s failure and incompetence and is the most serious measure an external auditor can take – only five have been issued across the country since 2015, with none in London – showing how shockingly wide the failings have been.
The report highlights that the failing Labour-run Council:
...has experienced deteriorating financial resilience for a number of years, has significant issues related to its financial sustainability and has not responded promptly to previous audit recommendations and concerns...
...numerous opportunities have been missed in recent years to tackle the Council’s financial position.
The failure of Croydon Labour to manage the Council’s finances since 2014 has seen debt doubled to £1.5 billion, borrowing an outrageous £15,000 every single hour, and recently led to it begging the Conservative Government for a bailout. Labour Croydon has reduced the Council reserves to a shockingly low level of just £7 million whilst lending £250 million to its wholly owned loss making developer, Brick by Brick.
At a recent Audit Committee an independent expert, brought in to review Labour’s financial mess, made clear that the same errors have led to overspends year after year, and that the Labour Cabinet, the majority of whom remain in office now, shared responsibility for these overspends.
He said at the meeting:
“The evidence is that we’ve seen similar errors repeated year on year in terms of the budget setting process not being sufficiently robust, late decisions in relation to budget setting, insufficient due diligence in terms of savings and failure to deliver.”
He also said:
“Cabinet does need to take action if it sees the Council is overspending and make sure that Officers have clear instructions to bring spend back.”
The Conservative Opposition has been pointing out the same failings for many years, including challenging investments that didn’t deliver the intended outcomes and not paying attention to controlling overspends. Instead Croydon’s Labour Council has been entirely focussed on complaining about the funding received from Government whilst continuing to spend money they simply didn’t have.
Cllr Jason Perry, the Leader of Croydon Conservatives, said:
“Sadly it is not at all surprising that Labour Croydon is subject to ‘A Report in the Public Interest’, the most damning of audit reports, which means that the public must be made aware of the financial fiasco caused by Labour. The writing has been on the wall for many years – the Labour Cabinet simply didn’t care that their budgets were overspent and that the Council’s reserves were frittered away, preferring to buy failing hotels and shopping precincts”.
“Now the poorest and most vulnerable residents in Croydon will suffer as services are cut back, whilst the majority of the Labour Cabinet who oversaw these failures remain in charge.”
“Croydon Labour is failing at every level and can’t be trusted with our money. Croydon deserves better.”
What the report highlights
The Council’s external auditors are of the opinion that that the Council:
- has experienced deteriorating financial resilience for a number of years
- has significant issues relating to its financial sustainability
- has not responded promptly to previous audit recommendations and concerns
- and that this needs to be brought formally to the public’s attention
Those concerns relate primarily to:
- Overspends in Children and Young People and Adult Social Care over a number of years
- Reserves not maintained at a sustainable level
- Reliance on use of capital receipts for transformation expenditure
- Managing Dedicated Schools Grants within existing budgets
- The impact of Unaccompanied Asylum Seeking Children expenditure
- Treasury Management and affordability
- The complexity and risk of the Council’s subsidiary company structure
- The Council’s governance of it’s financial decision making
The report identifies that:
- There has been “corporate blindness” to the seriousness and urgency of the financial situation
- There is little evidence that £73m of transformation money has reduced demand, delivered savings or reduced costs in children’s of adults’ social care
- The council has focused on service improvement without sufficient attention to controlling overspends
- There has been investment in the Place area without addressing if that investment was delivering the intended outcomes
- Financial governance has been focussed on lobbying government for additional funding and not supported by actions to contain spending within available funding
- Numerous opportunities have been missed in recent years to tackle the Council’s financial position
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