Ranil Perera DEMOC committee member and former Labour Party council candidate reviews the Grant Thornton audit report on Croydon, and how a Directly Elected Mayor can help resolve some of the problems found.

Full Report at: https://www.croydon.gov.uk/sites/default/files/articles/downloads/Report%20in%20the%20Public%20Interest%20-%20London%20Borough%20of%20Croydon.pdf

Grant Thornton Report issued a Public Interest under section 24 and Schedule 7 of the Local Audit and Accountability Act 2014 on the London Borough of Croydon Financial Position and Governance.

Issues identified

· The London Borough of Croydon experienced deteriorating financial resilience over several years.

· The Council ignored recommendations in 2017/18 Audit Findings Report presented by Grant Thornton to the General Purposes and Audit Committee in July 2018.The report noted that reserves were very low, and that there were a number of risks to continued financial health.

· The Council took no action when Grant Thornton presented their 2018/19 Value for Money Conclusions to the General Purposes and Audit Committee in October 2019. The report identified significant costs and that the reserve position was low compared to other London Boroughs. They noted also that the forecast deficits for both 2019/20 and 2020/21 exceeded the available general fund reserves.

· The financial position continued to deteriorate during 2019/20.

· Grant Thornton wrote to the former Chief Executive in April 2020 setting out action considered to be vital. But, as at the end of August 2020, the Council had failed to produce a formal action plan or to respond to audit recommendations although a formal written response was received by Grant Thornton on 28 September 2020.

· Some overspends have been masked by both the accounting treatment e.g. Dedicated Schools Grant deficit (which Grant Thornton disagree with) and the ‘flexible’ use of capital receipts.

· In the past three years, the Council has reported significant service overspends of £39.2 million within children’s and adult social care.

· The budget monitoring reports during 2019/20 showed significant overspends, which reduced following ‘corporate adjustments’ of £17.7 million. The reports were accepted by Members without an appropriate level of challenge.

· Financial Consultant retained by the Council reviewed budget setting, monitoring, and reporting processes and identified areas for improvement.

· Neither the Cabinet in July 2020 and nor the Scrutiny and Overview Committee in August 2020, addressed the significant fact that the budget gap exceeded the available reserves. In Grant Thornton’s view this was a failure of governance and showed a lack of understanding of the urgency of the financial position by Councillors.

· The size of the financial gap in 2020/21 has increased due to the additional financial pressures resulting from the covid-19 pandemic.

The new mayor Ms Hamida Ali acknowledges “This report highlights serious issues with how the council has managed its finances in recent years.”

https://news.croydon.gov.uk/new-council-leader-apologises-and-pledges-swift-and-decisive-action-to-address-findings-of-public-interest-report/

Why did things go wrong?

The report clearly identifies why things went wrong:

· Lack of independent challenge - the ‘strong leader’ model discourages challenge – councillors lose their privileges / rewards if they challenge the ‘strong leaders’ actions and privileges.

· Recommendations of auditors not acted on:

o Recommendations were presented in their 2017/18 Audit Findings Report by Grant Thornton to the General Purposes and Audit Committee in July 2018. The report noted that reserves were very low, and that there were a number of risks to continued financial health.

o No action was taken after Grant Thornton presented their 2018/19 Value for Money Conclusions to the General Purposes and Audit Committee in October 2019. The report identified significant costs that needed to be addressed and that the reserve position was low compared to other London Boroughs. They noted also that the forecast deficits for both 2019/20 and 2020/21 exceeded the available general fund reserves.

· Lack of financial expertise / financial leadership

· Poor governance including:

o Lack of stakeholder engagement

o Insufficient monitoring of financial performance

o Lack of long to medium term financial management

o Insufficient external financial reporting

o Inappropriate group company structures

The remedy – Directly Elected Mayor

· A directly elected Mayor can provide independent challenge. For example, make appropriate challenge to plans and proposed action. A Directly Elected mayor is accountable to the local electorate and not to party groups. This can prevent ‘tribalism’ from developing.

· Also Directly Elected Mayors being accountable to the local electorate and not to party groups, will improve governance – making decisions that benefit the electorate as a whole, rather than party groups or colleagues.

· As representatives chosen by citizens rather than their party colleagues, Directly Elected mayors are arguably more externally focused. Many such Directly Elected Mayors see themselves as the leader of the region for which they are elected rather than as the (strong) leader of councillors.

· A Directly Elected Mayor can ensure Councillors elected have sufficient financial and risk management expertise to achieve good outcomes. If not recommend training / have advisors.

· A Directly Elected mayor can:

o Monitor financial performance objectively

o Develop, implement and monitor a long-term financial strategy

o Manage capital strategy

o Oversee an asset management plan

o Ensure financial resilience

o Maintain reserves

· By virtue of being directly elected, mayors are known to a far greater proportion of the local electorate than are council leaders selected by majority. Thus, they have an incentive to devise and implement policies and oversee procedures that yield good outcomes for the electorate.

· A Directly Elected Mayor can reconnect voters and politicians to yield good outcomes.

· Directly electing a Mayor encourages developing a strong and more personal relationships with their constituents and crucially empowers local citizens by ensuring they have a clear sense of who is in charge and who they can turn to.by ensuring they have a clear sense of who is in charge and who they can turn to.

RESIDENTS’ PETITION TO BE IGNORED


CROYDON COUNCIL DENIES VOTERS’ RIGHT TO CHOOSE IF THEY WANT AN ELECTED MAYOR

Croydon Council have responded to their voters' legitimate petition containing over 17,000 valid signatures and calling for the people to be given the choice next May, by using Covid to block it.

The Council has the legal power to call a referendum on 6 May, the same day as the London Mayor and Assembly elections. That is the obvious day to have it because the extra cost would be minimal and if decided, a Mayor would be elected in May 2022 when the local Council elections take place.

Under current legislation Croydon Council could and should have done so but the Leadership are too scared to face the decision of the people and prefer to cling onto power. The law gives the people the right to a referendum if 5,% of voters demand one. In Croydon 5% is 13,788 voters. Although over 17,000 voters signed the petition, the Council Leadership refuses to use their legal powers to call the referendum in May. They refuse to let the people decide.

Shame on the Council Leader and shame on those Councillors who support the Leadership in denying the peoples' right.

Croydon needs more accountability and better democracy. The finances are in a dreadful mess and the people feel that they are not being listened to. It’s time for all Councillors to stand up for the people and make sure they are given the choice they demand in May 2021.

The Newham Democracy and Civic Participation Commission was established by the Mayor and Council of Newham to:

• examine both the Council’s current Directly Elected Mayor system of governance (introduced to Newham in 2002) and the alternative types that exist in English local government, and to make recommendations on the best system of governance for Newham’s future, and;

• explore ways in which local residents will have opportunities to be more engaged and involved in local decision-making and the Council’s work.

They have now issued their final report available at https://www.newhamdemocracycommission.org/wp-content/uploads/Democracy-Commission-Report.pdf

The report is worth looking at for views on local democracy. The following are quotes from the document:

“Councils are having to think differently about the relationship they have with local people. Councils are not just service providers, emptying bins or running libraries – council tax is not like a “subscription” for these services. Councils are democratic institutions, and this demands a different approach to dialogue and participation.”

“Importantly this is not about an “all-powerful” Mayor bending everyone to their will - it is about “convening power”. It is easier for a person to argue their case when they have been elected by tens of thousands of people than where, like a conventional local authority leader, they have been elected by 60 other councillors. Democratic legitimacy counts for a lot in partnership working. This is supported by the conclusions of the Warwick Commission on Elected Mayors and City Leadership, which found that executive mayors’ roles need to focus on identity (promotion of the place), relationships (communication, building bridges and partnerships) and information (addressing how people get to know what happens in the area).”

We wonder how the current model in Croydon Council meets the needs of:

  • identity (promotion of the place)
  • relationships (communication, building bridges and partnerships)
  • information (addressing how people get to know what happens in the area)

We feel people might find it interesting to compare the review with that of the Dame Moira Gibb where “The Panel did not consider the Directly Elected Mayor as this was not within the scope of the Governance Review set by the Council” - Croydon Review.

20,000 local residents urge Council to hold referendum for a directly elected Mayor of Croydon on 6 May next year.

Today (3 September), a campaign led by local Residents' Associations and supported across the political spectrum, handed in a petition to Croydon Council with over 20,000 signatures – well in excess of what is legally required – to trigger a referendum for a directly elected Mayor for Croydon.

The leaders of the campaign called on Croydon Council’s leadership to confirm the referendum would take place on 6 May next year, the same day as the London Mayor and Assembly elections are already due to be held.

There are many good reasons why the people in Croydon want a directly Elected Mayor. Underlying all of them is the belief that the current council system doesn't work for residents – whoever is in power, half the Borough is ignored because of Croydon’s specific political landscape where the North of the Borough votes Labour and the South of the Borough votes Conservative. The Council doesn’t listen and often doesn’t seem to care what large parts of the community think.

The current Council's action in response to the 20,000 signatures on this petition, secured despite lost months from the Covid lock down, will be a good indicator of their approach to democracy and accountability. The current Council leader has stated his desire to delay the referendum for as long as possible, rather than making an argument to defend the current system and putting that to the people.

Gerry Meredith-Smith, Chair of the DEMOC campaign said:

“There is a desire for change in our Borough and a lot of momentum behind the idea of a referendum for a directly elected Mayor. Will the Council listen to the will of the people and go ahead with a referendum on May 6 next year? Will the Council now give people the choice over how their town is run and how those responsible are chosen by and accountable to the people?

“Or will they hide behind Covid legislation, using it as an excuse to ignore what a large number of the people of Croydon now demand? Will they prioritise holding on to their current positions and allowances for a few more months, rather than giving the people the chance of a better system and a better future for our town?”

Joanne Milligan, Vice Chair, Croydon South Labour Party, said:

“This campaign is about what is best for democracy and best for Croydon – not which political party is in charge. Residents’ Associations, members of all political parties and of none, have come together to change the way local government in Croydon works – to boost accountability.

“We want to change the system so that whichever political party the Mayor comes from, they have to listen to people right across the Borough from Norbury to Coulsdon and New Addington to Waddon.”

Chris Philp, Conservative MP for Croydon South, said:

“As the local Conservative MP, you would expect me to disagree with Croydon’s current Council on a wide range of issues – from their indiscriminate approach to granting planning permissions to the abject failure to deliver the regeneration of Croydon’s town centre; from the huge cost overrun on the Fairfield Halls refurbishment to the near bankruptcy of the borough’s finances.

“But the root of many of these problems stems from the way the Town Hall works. A directly elected Mayor would dramatically increase the accountability of those who run our town locally.”

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