Agenda item

RESOLVED: To

1.1 Note the interim outcomes of the Opening the Books exercise including the financial adjustments resulting from Croydon Affordable Homes/Croydon Affordable Tenures and other historic legacy errors (as set out in paragraph 3.5).

1.2 Approve a further allocation of £250k from the Council’s contingency reserve for the Opening the Books project.

1.3 Approve a virement of £798k from the Council’s contingency reserve to the Assistant Chief Executive’s budget for the Corporate Programme Management Office.

1.4 Note the negotiations with DLUHC in relation to the evidence needed to agree a further package of support in relation to both the legacy financial issues that have come to light, the level of indebtedness and for the future years 2023/24, 2024/25, 2025/26 and 2026/27.

1.5 Agree a period of public consultation and engagement on the proposals for returning the Council to financial and operational sustainability that includes

a. The savings options set out in Appendix B;

b. Transformation Programme in Appendix C;

c. The list of assets for disposal set out in Appendix E;

d. The closure of Whitehorse Day Centre; and

e. The closure of Cherry Orchard Garden Centre.

These proposals shall form part of the 2023/24 budget consultation process.

The outcome of the public consultation shall be reported back to Cabinet for a decision as part of the budget and council tax setting.

The Executive Mayor announced that he would be considering both matters together.

Cabinet considered two reports, which (i) focussed on the Council’s Budget, which was not financially sustainable and, as such, the Corporate Director of Resources and S151 Officer had taken the decision to issue a Section 114 Notice in relation to balancing the Council’s budget from 2023/24 onwards; and (ii) recommended the adoption of a new Corporate Asset Management Plan and outline Property Strategy to provide clear guidance in the way that the Council’s assets were managed within the Executive Mayor’s priorities and Executive Mayor’s Business Plan (this would not only involve delivering the required services but also to maximise the delivery of revenue opportunities and capital receipts wherever possible.)

(i)           With regard to the Medium-Term Financial Strategy 2023/24 to 2025/26 Update, the report went on to say that the “Opening the Books” programme, which had been initiated by the Executive Mayor, had revealed further historic legacy issues that had undermined the ability of the Council to not only balance its budget but also to become financially and operationally sustainable over the current agreed medium-term financial strategy. In particular, the level of non-asset backed debt the Council had to service meant its general revenue budget was unable to meet the needs of the people of Croydon.

It was reported that, in October 2020, the Council’s external auditor, Grant Thornton, had issued the first of two reports in the public interest (RIPI) into Croydon Council, which stated that, for many years, the Council had failed to pay due regard to the seriousness of its financial position and the urgency with which action needed to have been taken.

In addition, in November 2020, the then Director of Finance, Risk and Assurance and S151 Officer had published the first of two Section 114 notices.  These notices made clear to all Members of Croydon Council, as well as staff and residents, that the Council faced an extremely serious financial situation in that financial year (2020/21).  It was also made clear that the Council’s expenditure was predicted to be significantly greater than its income resulting in a financial deficit being forecast, with insufficient reserves to fund this. The financial year ended with an overspend of £67m, thus confirming the conclusions of the external auditor in the RIPI of the seriousness of the Council’s financial position.

(ii)          With regard to the Corporate Asset Management Plan, the report went on to say that the Council was currently financially unsustainable and needed to reduce its asset base considerably.  It also recognised the need to reconfigure its services to drive efficiency in essential delivery areas. It was reported that the Plan would ensure that the right decisions were reached in relation to the Council deciding to sell, buy, rent or hold assets.

This Plan will deliver a more integrated approach to the use of the Council’s assets from both service delivery and financial perspectives, by:

• provision of properties that will directly contribute to the delivery of essential services to our communities and other stakeholders;

• ensuring better fire, health and safety management

• securing good and sustainable income streams from non-operational and investment properties.

• helping plan and manage property utilisation in support of the Council’s initiatives and service delivery;

• supporting the delivery of the Mayor and Council’s corporate vision, aims and priorities;

• formalising systems, procedures and controls;

• a more robust understanding of the current condition of our key operational assets to enable a more effective budget and repairs programme moving forward.

The Strategy outlines the approach to enable revenue and capital benefits to be secured and the approach and governance around the disposal of property and a proposed list of asset disposals. The principles established within these documents will be used to identify and bring forward future proposals.

The Executive Mayor then invited and responded to questions from members present.

Accordingly, the Executive Mayor in Cabinet, RESOLVED that:

(i)           With regard to the Medium-Term Financial Strategy 2023/24 to 2025/26 Update:

1.            The interim outcomes of the Opening the Books exercise, including the financial adjustments which resulted from Croydon Affordable Homes/Croydon Affordable Tenures and other historic legacy errors (as set out in paragraph 3.5), be noted.

2.            A further allocation of £250k from the Council’s contingency reserve for the Opening the Books project, be approved.

3.            A virement of £798k from the Council’s contingency reserve to the Assistant Chief Executive’s budget for the Corporate Programme Management Office, be approved.

4.            The negotiations with DLUHC in relation to the evidence needed to agree a further package of support in relation to both the legacy financial issues that had come to light, the level of indebtedness and for the future years 2023/24, 2024/25, 2025/26 and 2026/27, be noted.

5.            A period of public consultation and engagement on the proposals for returning the Council to financial and operational sustainability be agreed, and to include:

a. The savings options set out in Appendix B;

b. Transformation Programme in Appendix C;

c. The list of assets for disposal set out in Appendix E;

d. The closure of Whitehorse Day Centre; and

e. The closure of Cherry Orchard Garden Centre.

These proposals shall form part of the 2023/24 budget consultation process.

The outcome of the public consultation shall be reported back to Cabinet for a decision as part of the budget and council tax setting.

And:

(ii)                  With regard to the Corporate Asset Management Plan:

1.            The Corporate Asset Management Plan attached at Appendix 1 to the report, be approved.

2.        The proposed Corporate Property and Disposal Strategy attached at Appendix 2 to the report, be approved.

3.        The list of proposed asset disposals attached at Appendix 3 to the report, which would be subject to relevant decision-making in accordance with the Financial Regulations and any service provision decisions, including statutory consultation where required, be noted.