A government review into the financial collapse of Croydon Council exposes serious failings in management and leadership at the authority.

It has agreed to give the council a multi-million pound loan, known as a capitalisation direction, which means it will be able to balance its budget this year.

A projected overspend for 2020/21 of more than £60 million forced the council to issue a Section 114 notice in November last year.

The review, which took place in October, was published yesterday (Monday, February 1) and involved carrying out more than 60 interviews with staff and councillors.

The report said: “There seems to be a unanimity of view that these failings are attributable to the poor leadership and poor management of the council over a number of years.”

It goes on to say that former council leader Tony Newman created an “inner circle of a small number of cabinet members” who were controlling in their management of the council and its finances.”

The report went on: “We heard many accounts of officers being asked to re-word cabinet reports to present the most favourable picture.

“It is evident that the tone of many financial reports to cabinet do not accurately reflect the seriousness of the council’s financial position.”

Councillor Hamida Ali took on the role of leader in November after cllr Newman stepped down. 

The report added that the council is not in denial about ‘the perilousness of its position’ but there is anger from staff that the council has been led to the situation. 

Councillor Hamida Ali said: “Since I became leader, I have been clear that my absolute priority is to get Croydon’s finances back on track and strengthen our governance so that we can deliver good essential services and value for money for residents.”

Last month it was announced that a Government-appointed improvement and assurance panel will be created to watch over Croydon Council and feedback directly to secretary of state Robert Jenrick and MHCLG on a quarterly basis. 

Councillor Ali added: “I really welcome the panel and their role to bring their expertise to bear through challenge and advice as we seek to drive forward and deliver our renewal plans at pace.

“We have already made significant progress but there is a long way to go and we will continue to engage fully with the panel and MHCLG as we continue this vital work.”

The panel is being headed up by Tony McArdle who said: “We are here to guide and support Croydon in turning this position around, and to assure him of progress to that end.

“There is much to do and we have already begun work. We look forward to being part of the recovery that everyone we have met assures us is their aim. It will certainly be ours.”