Local Government Finance: Croydon

Debate between Elliot Colburn and David Simmonds

Wednesday 9th December 2020 Commons Chamber

[Elliot Colburn (Carshalton and Wallington) (Con)]

The financial situation in Croydon is worrying to residents in Carshalton and Wallington, as the London Borough of Sutton sits directly next to the London Borough of Croydon. My hon. Friend mentioned the council’s housing development arm. Does he share my concern that the huge amount of money that has been wasted does not seem to be accepted by the council administration itself, and that the first step to recovery for Croydon will have to be the administration acknowledging the mistakes that were made in getting it to this point?

[David Simmonds]

My hon. Friend is absolutely right to draw attention to that. Part of the reason for this debate is the frustration expressed by many that everyone—from the auditors, to local residents, to councillors in the opposition group, to Members of Parliament—was raising these concerns, but they seem to have fallen on deaf ears. There is an absolutely critical need for the assurance in other local authorities—not just Hillingdon and Harrow but Sutton and elsewhere—that a closer degree of attention is being paid to the finances.

The point that my hon. Friend draws attention to was compounded in the case of Croydon, where—as Grant Thornton, the auditor, has highlighted—there was a growing and unaddressed funding gap in the delivery of day-to-day services. These are the basics for a local authority, as opposed to extraordinary speculative business activity that is out of the norm. That prompted Grant Thornton to issue—an extraordinary step—a report in the public interest, given the scale of its concerns, highlighting a shortfall of about £60 million between the resources available and the budgeted expenditure. That is a cash-flow problem on a massive scale, distinctly out of proportion with anything that we have seen in any other London borough.

I should declare that I enjoyed a positive working relationship with the former Croydon leader, Councillor Tony Newman, in my local government days, and always found him a very passionate advocate for Croydon—somewhere that was clearly his place that he felt determined to improve. There is no suggestion that he or his colleagues have acted in anything other than good faith. However, with such a perilous financial position facing residents, and others across London asking what it means for them, it is important that the Department, the Government, the wider local government family and Croydon itself are clear about what has gone wrong and about the fact that this combination of failed commercial property speculation and, more importantly, the failure to address the fundamental management issues is out of step with what we see in other London boroughs. I want all residents in the capital to enjoy the stability, the residents-first attitude and sound financial management that is consistently highlighted by my constituents, because it is critical to the delivery of services on which our community depends.

It is clear that Hillingdon and Harrow, Barking and Bexley and Havering and Redbridge have all faced the financial challenges of austerity and of covid, and they have emerged with budgets that are robust. It is what some have described as disastrous failed commercial property speculation and a fundamental lack of grip on the finances that have unusually brought Croydon to this position. The local government sector is stepping in to help. I know that Ministers will be aware of the particular value of the Local Government Association-led and sector-led improvement teams, who are already beginning to help out. After all, why pay expensive consultancy firms when peers who have been through it are able to rally round and use their experience to help sort the situation out?

Although Labour representatives have sadly remained silent on these concerns—and, in the case of Mayor Khan, heaped praise on the administration for “perfect examples” of projects that even then were millions of pounds over budget—I am determined, and we should be determined, to provide other residents across London with an assurance that such failings are not common across London’s councils. I know that Ministers are equally determined that the success of our councils is not undermined by the reputational damage and what has happened in Croydon.