Croydon’s new council leader has apologised and vowed change after a new report appeared to show severe financial mismanagement of the council’s finances.

Councillor Hamida Ali, who has taken over from former leader Tony Newman, said sorry and pledged to act swiftly after a public interest report published by the council revealed the grave situation of the council’s finances.

Among the findings detailed in the report were a number of ‘gaps’ and recent overspends including a “significant service overspends of £39.2 million within children’s and adult social care over the last three years.”

Commenting on the report last week (October 23), Cllr Ali said:

“This report highlights serious issues with how the council has managed its finances in recent years. These problems have deep roots, but I am sorry we got things wrong and I want to reassure our residents, staff and partners that my absolute priority as the council’s newly-elected leader is to put this right.

“While a decade of austerity and the Covid-19 crisis have had a major impact on our finances they do not excuse the issues this report has laid bare.

“The council fully accepts the findings and recommendations of this report and the council’s new leadership will take swift and decisive action to stabilise the council’s finances and governance. My new administration is committed to a new culture which puts transparency, accountability and value for money at its heart.”

The report, created by financial advisors Grant Thornton detailed “deteriorating financial resilience for a number of years” at the council with regards to overspend, borrowing, lack of government funding and a failure to address those issues.

“There has been a collective corporate blindness to both the seriousness of the financial position and the urgency with which actions needed to be taken,” one sentence in the report’s summary read.

“The Council has increased the level of borrowing significantly in recent years (£545 million in three years) and used the borrowing to invest in companies it established and to purchase investment properties,” another section described.

“The Council’s approach to borrowing and investments has exposed the Council and future generations of taxpayers to significant financial risk. There has not been appropriate governance over the significant capital spending and the strategy to finance that spending.”

In response to its findings, Cllr Ali and the council are pledging to implement a drastic action plan to combat the dire financial situation outlined by Grant Thornton.

Among them are a £42 million package of savings, and a formally applying for a central government loan to patch up the council’s finances as savings plans take effect.

“The council has already taken significant steps to control our budget and more will be required in the coming months. The whole council must now come together to address the criticisms in the auditor’s report,” Cllr Ali said.  

“I will set out proposals in the Croydon Renewal Plan to show how we will transform our organisation into one that is financially sustainable and rebuild the outstanding public services Croydon’s residents expect and deserve.”