Croydon Council has submitted representations in response to the Government’s announcement that it is ‘minded to’ appoint commissioners to the Council.
The root cause of the Council’s financial challenges is the structure of its historic £1.4bn general fund debt.
The Council says it cannot become financially sustainable and meet its Best Value Duty until a solution from Government, such as a debt write off, is agreed.
Croydon says it is understood this has been granted to other councils with similar debt.
Executive Mayor of Croydon Jason Perry said: “We strongly oppose the Government’s plan to appoint commissioners to our Council.
“Croydon has gone further and faster than most to tackle its financial challenges head on, and our circumstances are among the most challenging of any in the country.
“With a raft of external partners saying our Council is well run, this would be the first time the Government has removed power from elected representatives where there has been no identified failure in governance.
“Independent reports – including from our Government-appointed Improvement and Assurance Panel – all agree that the problem lies with the Council’s £1.4bn structural debt, much of which is not backed by assets. On top of this we are grappling with the spiralling demand and increased costs that all councils are facing.
“We have repeatedly pressed the Government on the need for a sustainable solution to this historic debt burden, rather than the sticking plaster of capitalisation directions – which are payday loans adding to our borrowing costs. Yet the Government failed to include a solution for Croydon in their spending review, whilst we understand that other authorities have been granted a debt write off.
“We fully understand that the Government needs assurance that we are doing all we can to fix the finances and deliver best value to our residents, but we do not believe sending in commissioners is the right plan for Croydon. We have put forward alternative proposals and we look forward to receiving their response.
“As the elected Mayor of Croydon, I have always put the needs of Croydon residents first and will continue to do so. I will not standby and allow the decimation of our home borough because of the past actions of a reckless few.”
The Council recommends:
• that MHCLG consider a rapid Best Value Review be undertaken, to include an independent financial assessment, to advise on the fastest and most effective restoration of the financial sustainability of the Council’s budget.
• that a stay to the final decision on the “minded to” position in MHCLG’s 12 June letter is made. This will enable the findings of the review to be fully considered, the impact of the funding formula review to be considered; and to avoid unreasonable and pre-emptive action being taken.
The Council continues to also recommend the three proposals put forward by the Executive Mayor to the Secretary of State in his letter in May. These are:
• An independent financial assessment to determine the fastest and most effective way for the Council to meet its Best Value Duty
• Establish an external assurance board
• Maintain and strengthen existing financial assurance mechanisms through the appointment of a ‘non-statutory improvement adviser.’
