The new head of Croydon Council pledged to change ‘the way we make decisions as an organization’, accepted the need for better financial management and opened the door to meeting activists for a referendum on governance, which could lead Croydon to move directly to an elected mayor model of local government.
In her first interview since she was elected president of the board last month Hamida Ali said About London as the auditors Grant Thornton, who have produced a public interest report Criticizing the council for “corporate collective blindness” as to the seriousness of its financial situation, had “just raised the concerns they have made.” Responding to the report’s opinion that the management of public funds has been poor, Ali added that “it does not get more serious than that in terms of concerns that could be raised with a public authority”.
Ali also said she would be “very happy to meet” activists for a referendum on governance, who were told in September that a petition they delivered to council earlier in the month calling for a referendum under the Local Government Act could not be formally accepted until May 6 of the year due to emergency Covid-19 legislation.
“Obviously there is an appetite among residents to have this conversation [about the borough’s governance model]. The role of the local authority, under the right circumstances, is to facilitate this debate, ”said Ali. “I am grateful to the activists for contacting me and I will honor their request for a meeting.”
Ali’s stance towards activists is significantly more accommodating than that of his predecessor Tony Newman, who resigned last month, and seems to recognize that a referendum is likely inevitable at some point. She said About London that council agents and representatives of the campaign, which was considering a legal challenge, have already met
Newman’s departure after leading the board since 2014 followed those of chief executive Jo Negrini and Simon Hall Finance Cabinet Member. It predated the Grant Thornton report, but followed Croydon’s request to the Department of Housing, Communities and Local Government for a “sense of capitalization– effectively an offer to be granted greater flexibility in the management of its finances in order to face its budget gap.
Last Thursday, the day before Ali’s conversation with About London, Communities Secretary, Robert Jenrick sent a team of three to Croydon to conduct a “rapid extralegal reviewOf the council’s situation in response to Grant Thornton’s report, which found particular fault with Croydon’s control over adult and child welfare budgets and complex local real estate investments.
When asked if she bore any responsibility for Croydon’s predicament, Ali, 44, who was first elected in 2014 in the same neighborhood as Newman and served in his cabinet before becoming chief , responded that “the report is quite clear that the challenges are quite systemic across the organization”, and identified a “common thread” in Grant Thornton’s report “about members not providing enough challenges” , although she also said: “I am keenly aware of my role in the cabinet over the four years” covered by the report. Ali was a member of the Cabinet for Communities and Community Safety during the period covered by the Grant Thornton report, after a year as Deputy Minister of Finance.
Newman reiterated About London in October, his long-held view, shared with his Tory predecessor at the head of Croydon, that the borough has been historically underfunded by the central government, which failed to recognize the high levels of disadvantage suffered by a growing number of residents of the northern end of the borough in particular.
However, Grant Thornton identified concerns dating back to 2017/18 and recommendations for action “that have not been implemented”. The board was found to have made initial ‘rapid’ progress in response to a financial review conducted in May 2020, as pressures from the coronavirus made it increasingly exposed. But the report adds that while the continuing difficult financial situation was brought to the cabinet’s attention in July and convened by the advisers’ review and oversight committee in August, “none of the meetings discussed the significant fact that the budget gap exceeded the reserves available to the full board. He concludes: “In our opinion, this is a failure of governance and a lack of understanding of the urgency of the financial situation.
A “revolving investment fund” (RIF) aimed at financially supporting housing construction and other real estate programs to promote long-term growth and income streams was found to be poorly assessed in terms of risk, in terms of risk. particularly given the complexity of its provisions. Grant Thornton found “little evidence of dispute by members at meetings (plenary council or cabinet) on the production capacity of programs or the impact of each program on the long-term financial position of the council”.
One of the projects supported by the fund, the council-owned house building company Brick by Brick, which is financed by commercial loans from the council, is described in the report as having “not made an interest payment. with £ 5million due as of March 31, 2019. ”A spokesperson for Brick by Brick, however, said the company was fulfilling its mission of building homes with“ over 1,000 homes under development ”and that it was now entering “a new and important phase where the proceeds from the sale of our homes provide significant back-to-council funding that can be spent on front-line services, for the benefit of the people of Croydon. “
Ali declined to comment on the performance of Brick by Brick or any other RIF-backed program, saying she would wait until a program review already commissioned by PwC is finished, hopefully in the next few weeks. When asked if Croydon’s growth strategy under Newman had been too ambitious, she stressed that she is “not alone as an authority to develop more business in a much more commercial context than the local government would not have done so before, “adding that” local authorities must to some extent have been pushed in this direction by cuts in the income support subsidy “.
Although he refuses to express a strong opinion on directly elected executive mayors, Ali, whose career outside local government includes 21 years with various public sector bodies working on equality and diversity policies, did reference to the recent review of Croydon’s internal governance and the issues it examined on how to further involve the majority of the 70 borough councilors in policy development and execution. Highlighting the Grant Thornton report’s points about insufficient challenges and scrutiny within corporate culture, she observed that an aspiration to “make more decisions more collectively” raised the question: “Do you want to concentrate the power more? At the top of the governance structure.
Croydon Council has the power to hold a referendum on governance on its own, as the mayor of Newham has said his borough will. At the same time, Newham’s own decision to refuse to accept a petition presented to him earlier this year faces a legal challenge. If a referendum is held in Croydon, the choice is imposed by law between the current governance model and a single authorized alternative. Ali said Croydon’s Labor Party would discuss the issue and take a position in due course, and that “at the end of the day if this referendum takes place it will be the people who decide”.
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