Local Government Minister “pleased” by governance improvements at Croydon
The Minister for Local Government, Simon Hoare, has welcomed an increase in the pace of improvement at Croydon Council and reports of strengthened governance arrangements, in his response to a report from the London borough's Improvement and Assurance Panel.
The panel, led by Tony McArdle OBE, was sent in to Croydon in 2021 following the issuance of a section 114 notice the year prior.
The London borough has since issued two more Section 114 notices, with the latest being in November 2022, and is still wrestling with more than £1bn in debt.
In an effort to balance its budget for 2023/24, Croydon found savings of £36m, hiked council tax by 14.99% and sought support from the Government by way of capitalisation directions totalling £63m.
This came as the council agreed to a capitalisation direction of £161.6m in principle to cover historic charges uncovered by the panel.
Croydon has also reportedly asked the Government to write £540m of its debt off or that the Whitehall provide an annual sum of £38m to sustain the debt.
The panel, which is aimed at addressing poor financial control and governance at the council, reported in October 2023 that "substantial progress" had been made and set out plans to leave the council by July 2025 or sooner.
In the October 2023 report, which been published today (24 January) by the Department for Levelling Up, Housing and Communities (DLUHC), the panel said the council's pace of improvement had "moved up a gear" and detailed plans to leave the council by July 2025 or sooner.
Describing governance improvements, the report said Croydon has "continued to embed the sound governance arrangements" suggested by the panel.
The council's executive mayor has "demonstrated resolution" in taking difficult decisions in the pursuit of financial sustainability, and "debates upon such matters are vigorously and constructively conducted in the appropriate Member forums," the report said.
It also highlighted that the Audit Committee is independently chaired and the Scrutiny and Overview Committee is chaired by the opposition, with both "working much better than we have experienced hitherto".
It added: "They are adding real value to the council's considerations and their continued development will be beneficial to the further development and stability of the council's governance arrangements."
Describing the budget setting for the 2023/24 budget and the council tax hike, the report said both decisions "proved challenging" and "required a repeated emphasis of the legal duty upon councillors in this respect, such emphasis being made by us, the external auditors and relevant council officers".
The report also noted that comprehensive and relevant 'Key Performance Indicators' for delivery of the Mayor's Business Plan have been debated and introduced, enabling "both effective monitoring and ensure accountability".
The report said an array of Internal Control Boards that "provide for the necessary management of performance and change" have also been implemented.
The report added that an "enhanced" quality of senior and middle management, investment in transformation initiatives and the appointment of a Director of Transformation gave "some confidence".
It also highlighted an openness to external review as encouraging but said: "Much, however, needs to be done to effectively introduce and then sustain these considerable changes, and working with the Council to ensure this will be a continuing priority for the Panel's attention."
One area where "significant improvement" is required relates to the council's procurement activities, the report said.
Croydon carried out a 'deep-dive' on its procurement processes, which highlighted significant failings in the effectiveness of the monitoring of its contract pipeline and of ensuring that expiring contracts were re-procured in a timely and controlled manner.
The investigation found "numerous" examples of contracts that had expired but were still being utilised, contracts due to expire with insufficient time available to reprocure effectively and in accordance with the regulations and questions around data quality that need to be addressed.
"These failings could leave the council exposed commercially as some suppliers may look to exploit the situation where short- term extensions are needed to maintain the provision of critical services", the report said.
In response, Croydon has sought to bolster its regular review of the contracts register, improve reporting and conduct a review of its procurement strategy, according to the report. The council aims to produce a procurement improvement plan and targets to tackle the issue.
The report also highlighted pressures in the council's children's services department due to a rise in referrals, open cases, assessments, and children on child protection plans.
The panel set out a number of improvement goals in children's services and requested the appointment of external advisor, Eleanor Brazil, to the panel to assist.
Brazil's appointment has been confirmed by DLUHC in a letter today (24 January).
In a separate letter to the panel, Local Government Minister Simon Hoare wrote: "The financial challenges facing the council remain significant. I agree with your assessment that the council must go further to identify transformation efficiencies and reduce service costs to achieve financial stability. I also recognise that Children's Services remains a significant pressure for the council.
"The appointment of Eleanor Brazil to the Panel will provide expertise and challenge on their improvement plans in this area."
He added: "This is a critical point in the council's improvement journey, particularly as it navigates its way through the budget setting process to agree a budget for 2024/25.
"The 'Exit Strategy' you have developed in collaboration with the council provides a realistic pathway to secure the necessary improvements and it is vital that Mayor Perry's Business Plan, which supersedes the former Croydon Renewal Plan, continues to be implemented for the benefit of Croydon residents."
Adam Carey
