Croydon Council is on the verge of bankruptcy, but how did we arrive at this point? Was it COVID-19, Government underfunding or financial mismanagement by Cllr Newman and the Labour administration? The seeds of the current meltdown were sown several years ago and whilst no-one denies that Croydon has faced significant challenges over recent years the reality is that we did not need to be in the position we now are.
Labour took control of Croydon in the local elections of May 2014. At that time the council had debts totalling £717m against a maximum borrowing limit for the year ending March 2014 of £895m. The outgoing Conservative administration achieved a £2.9m surplus in their last year of control. The first signs of the direction Labour would take were seen when this surplus was not added to reserves (which would have been prudent), instead it was set aside for Cllr Newman and his team to spend on their ‘priorities’.
The following six years have seen an annual deception take place. Cllr Simon Hall (Finance and Treasury) would present a Labour budget that blamed the government for cutting funding whilst at the same time increasing borrowing and raising their own credit limit. Anyone who has run a business or managed a family budget will know that if your income is dropping then your ability to support borrowing also goes down, not up! Between 2014 and 2020 Labour increased borrowing to an eye watering £1.513Bn whilst also increasing the amount of debt they think is acceptable to nearly £2.1Bn. It cannot be seen as a coincidence that their most senior finance officer (who had to sign off these figures as reasonable) quit his role with no new job to go to and now their Chief Executive has also jumped ship. The risks that they were taking were highlighted every year but they ploughed on regardless. Even in their first year their own reports clearly showed that they should be increasing the levels of reserves to balance the potential risks. They chose not to do so.
Let me put those debt figures in some context. The £800m Croydon Labour has borrowed since 2014 would be enough to build Arsenal’s Emirates stadium. TWICE. The now closed down Croydon Park Hotel (bought by Labour) hardly compares. But just how much is £800m? To get to that figure Cllrs Newman and Hall have been borrowing £15,000 an hour, every hour, for SIX YEARS.
‘Cllrs Newman and Hall have been borrowing £15,000 an hour, every hour, for SIX YEARS’
So why is the council going bust now? Surely COVID-19 has played a part in this. Yes, undoubtedly it has. Every council across London and the country as a whole has been placed under additional financial pressure by what has happened. National government has as well, as have most of us as individuals, families and businesses. No one denies this. Croydon however, is one of only a handful of councils nationally and the only council in London to be pushed to the brink. And that’s due to poor local decisions and poor local planning.
Is it really that bad? Since the lockdown started every council has been required to submit a statement on their finances to the government (this is called the MHCLG return). The latest return from Croydon included a damning statement. When asked if the council could maintain it’s ongoing costs over the coming months, their reply stated that they would not be able to do so ‘before the end of September’. It IS that bad.
Labour have had six years running Croydon, in that time they have maxed out their credit card and played fast and lose with risk. The consequences of that will be felt by all of us in the coming months and years. Now Labour are having to go to the government they have been attacking for years with a begging bowl and ask them to bail Croydon out.
I and my colleagues in the Conservative group have called on Cllr Newman and Cllr Hall to resign over this fiasco. It won’t surprise you to hear that as yet, they have not done so – they haven’t even bothered to explain themselves to the residents they serve on the chaos they’ve created.