By Tara O’Connor, Local Democracy Reporter
Croydon’s recently-appointed council leader resisted calls to step down at a special meeting to discuss the state of the authority’s finances.
The council held an extraordinary meeting on Thursday to set out its response to 20 recommendations for change by its auditors.
They published a damning report into the financial state of the council at the end of October.
The report, which slammed “collective corporate blindness”, came just two weeks before the council was forced to declare effective bankruptcy – another meeting to set out how this will affect services will take place on December 1.
Sarah Ironmonger, from auditors Grant Thornton, said that the council was too slow to act on warnings made as long ago as 2017.
The council has the lowest reserves in London, currently at £7 million, and has massive borrowing debts of £1.5 billion.
This financial year it will not be able to balance its budget, with a black hole of £66 million – the reason it had to issue a Section 114 notice, declaring bankruptcy.
Ms Ironmonger said that there was not adequate challenge of overspends in the budget by other councillors on the council.
She added: “We always knew that 2021 was going to be a challenging year. Before Covid, you planned to meet the gap with a combination of savings and income generation.
“These are inherently risky if not accompanied by a robust risk assessment. The budget went through unanimously…at the end of the day all of you in the chamber voted for this budget.”
In his speech the leader of the opposition, Councillor Jason Perry, asked whether councillors Tony Newman and Simon Hall, previous leader and finance member, would be sacked as members for their flawed decisions in the past.
But Conservative colleague, Councillor Ian Parker, took it one step further. He said: “As a minimum anybody who served in the cabinet over the past six years, including you Cllr Ali, should step down, that is morally the right thing to do to give our town a fresh start for the future.
“Will you accept your part in this mess and for the town’s bankruptcy and stand down.”
But Cllr Ali, who took on the top job on October 22, hit back.
She said: “We acknowledge the mistakes that we made and we are resolving the situation, acting quickly and resolutely.
“I take my responsibility as being part of the cabinet very seriously, however my response has been not to step down but step up and lead our organisation confidently and assertively to address those concerns by the auditors.”
At the meeting, Cllr Ali also said the problems in the council were not down to individuals but systemic issues in the organisation.
An action plan to address the 20 recommendations includes developing a reserves strategy and risks in budget reports being properly scrutinised before being approved.
Later this month a report is expected to be published on the council’s complex arrangements with companies it owns.
This includes developer Brick by Brick which has outstanding dividend and loan payments to the council of £36 million – contributing to the situation at the council.
The council’s full action plan can be found here.
Pictured top: Croydon Town Hall
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