Under Labour Croydon Council's finances have fallen apart. A number of independent observers have now spoken out saying that the financial management and governance has got worse and worse, and the Cabinet has missed chances to fix the same issues every year.
The Chairman of the Council's Audit Committee has announced that the Committee will in future call Cabinet members in to review their performance against budgets. This will be a good step towards making Cabinet members accountable for their budgets. However, as it stands this is only possible for two Cabinet members whose portfolio align with Council budget lines.
As the Conservative lead on the Audit Committee, I have written to the Cabinet Member for Finance, Cllr Callton Young, asking him to realign the Council's reported budget lines with Cabinet portfolios, and make performance against budgets part of the Cabinet members' quarterly reports. Cllr Young was only appointed last month and has spoken out several times about his determination to correct the mistakes of the past - these are two simple measures that will go some way to improve the understanding of performance of Cabinet members against budgets. If he doesn't deliver it will show his words are empty and confirm that Labour can't be trusted with your money.
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Dear Callton,
As the Opposition Lead on GPAC, I want to again take the opportunity to welcome you to your Cabinet role. As the whole Council is now well aware, the position left to you by your Labour colleagues after 6 years in control is calamitous. Nonetheless, when I questioned you at Full Council earlier this month you recognised that serious mistakes have been made in the past, which is a necessary step to repairing the damage.
You will have seen from recent meetings of GPAC that one of the many concerns raised by Ian O’Donnell, the financial consultant brought into review the dire position that Croydon Council has fallen into under Labour control, is that the Cabinet has not been sufficiently attentive of overspends during the financial year. The Report in the Public Interest issued by Grant Thornton last week was even clearer, saying “the Council missed opportunities to take substantive action earlier to address the in-year budget gap indicating a lack of understanding of the urgency of the financial situation” and there were “opportunities in recent years where the Council could and should have taken action to mitigate the financial pressures that have led to the 2020/21 in-year pressures exceeding the Council’s reserve position.”
In order to address potential overspends more quickly and more robustly, as recommended by both Ian O’Donnell and Grant Thornton, Karen Jewitt, in her capacity as Chair of GPAC, recently announced that in future the Committee would be able to call Cabinet members to question the performance of their departments against budget. This was welcomed by the entire committee.
However, as Council budgets are currently presented, there is a limit to how much GPAC will be able to identify from these discussions. The six core verticals listed in the Council’s accounts (Place, Children Families and Young People, Health Wellbeing and Adults, Gateway Strategy and Engagement, Resources and the HRA) do not match up to the Cabinet portfolios recently announced by the new Leader of the Council. Nor is the spend within each vertical sufficiently detailed to allow it to be matched to a Cabinet Member portfolio.
In order that GPAC may properly review spending with Cabinet members, and on behalf of the Opposition, I therefore request the following:
- It is critical that each portfolio has a clearly identifiable and published budget and spend. The Council accounts should be reformatted to show these.
- Performance against these budgets should be included in each Cabinet member’s quarterly report.
As you will be aware, the primary factor which will determine whether Croydon Council is allowed to borrow the money it needs to avoid a Section 114 notification is whether the Ministry for Housing, Communities and Local Government has confidence in the Council to deliver on its plan. Given Croydon’s failure to deliver on plans over the last 6 years, and the “Corporate Blindness” identified by Grant Thornton which meant these failures were not addressed, a significant change in approach will be required to give MHCLG the confidence it needs.
The measures I have suggested above will bring transparency and accountability over Cabinet portfolio spend which has been lacking previously. Your public pronouncements since your appointment to the Cabinet have suggested that you are willing to learn from the mistakes of the past. Taking these simple steps will go some way to showing that, finally, a Croydon Labour Councillor is serious about financial management.
Your sincerely,
Stuart