Croydon blasted for ‘insufficient control’ of its companies

An independent report has criticised Croydon Council’s ‘insufficient rigor and control’ of its property investment companies.

The report by Grant Thornton raises serious concerns about the London borough’s financial position and governance and makes multiple recommendations for change.

The council’s newly-appointed leader, Cllr Hamida Ali has apologised over the findings and vowed to urgently address the areas of concern.

According to the report, the council has borrowed £545m in three years to invest in local authority-owned companies and buy investment properties.

The companies include housing firm Brick by Brick, Croydon Affordable Homes, the Growth Zone and Revolving Investment Fund.

It says the strategy for investing in properties was approved at using guillotine procedures, which meant there was ‘insufficient time to discuss and challenge the strategy’ and the first purchase was made two months prior to approving the strategy.

‘The council’s approach to borrowing and investments has exposed the council and future generations of taxpayers to significant financial risk,’ the report states.

‘There has not been appropriate governance over the significant capital spending and the strategy to finance that spending.’
And the report notes that despite heavy investment, the council has ‘not yet received any significant return’ from these companies.

The London borough will now seek a loan from the government in order to balance this year’s budget and enable the council’s transition to a sustainable budget over the next three years.

‘This report highlights serious issues with how the council has managed its finances in recent years,’ said Cllr Ali.

‘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.’

Photo Credit – Geralt (Pixabay)