[ad_1]
Croydon Goes Berserk: Worker-Run Council Nearly Bankrupt, Blaming Coronavirus … But Minister Says Authority ‘Dysfunctional’
- Croydon Council becomes second council in two decades to file for bankruptcy
- The neighborhood has Imposed emergency spending restrictions under Section 114
- Officials blamed the coronavirus crisis along with ‘a decade of austerity’
- The last authority to use the order was Northamptonshire County Council in 2018
The Croydon Council went virtually bankrupt yesterday.
The Labor-run South London district imposed emergency spending restrictions under a Section 114 notice, only the second authority in two decades to face such measures.
Local officials blamed the coronavirus crisis along with “a decade of austerity,” but the government last night accused the council of being “dysfunctional.”
The authority announced yesterday that it will not comply with its legal obligation to balance its books.
The Labor-led South London City Council (pictured) imposed emergency spending restrictions under a Section 114 notice, only the second authority in two decades to face such measures.
The Section 114 order means all city council spending is locked in, except for cash to safeguard the vulnerable and other legal commitments. Previous councils that faced budget crises include Hackney, London, which issued a section 114 in 2000, and Liverpool, whose militant Labor faction deliberately passed an illegal budget in 1985.
Hamida Ali, leader of the Croydon Council, said yesterday: “The Covid-19 crisis and a decade of austerity have had a major impact on our finances, but it is clear that the council has also made mistakes, and I am committed to fixing it.” .
Opposition councilors accused the authority of ‘playing Monopoly’ with the real estate market after it borrowed hundreds of millions for real estate investments, eroding its ability to weather the pandemic.
Days before bankruptcy, Communities Secretary Robert Jenrick announced that he was initiating a quick review of the council’s finances. Auditors recently criticized the authority after it failed to act in three years of internal warnings and a £ 60 million black hole in its budget.
Local officials blamed the coronavirus crisis along with ‘a decade of austerity’, but the government last night accused the council of being ‘dysfunctional’ (stock photo)
Mr Jenrick said last night that a new Public Interest Report “is damning on the dysfunctional governance within the Croydon Council, which has been completely irresponsible with its spending and investments.”
He added: “There are serious questions that local leaders have to answer and we are intervening to control the situation.”
He said the council had been allocated more than £ 23 million in funding since the start of the pandemic.
The Association of Local Governments, which represents municipalities, urged the Government last night to help the authorities to cope with the growing demand for daily services caused by Covid-19.
Croydon Conservative opposition leader Jason Perry said Labor councilors “have preferred to play Monopoly and borrow billions to buy hotels and shopping centers.”
He added: ‘They have doubled debt in six years to £ 1.5bn, that’s £ 15,000 an hour that they have borrowed since taking office in 2014.’
In August, the council’s former chief executive, Jo Negrini, stepped down from her £ 220,000-a-year job after four years in office. Critics blamed her for the lavish investments, which forced the council to cut 400 jobs and cut its budget by 15 percent to stay afloat.
The council’s failure is expected to be a major embarrassment to London’s Labor Mayor Sadiq Khan, whose spokesman last night also blamed the pandemic “in part” for his troubles.
