Gove “minded to intervene” at Croydon, expands intervention at Thurrock

The Secretary of State for Levelling Up, Michael Gove, is "minded to intervene" at the London Borough of Croydon following a progress report which suggests the financially troubled council is not meeting its Best Value Duty.

Gove’s intentions to step in at Croydon came as part of a set of letters sent to councils that have declared effective bankruptcy by issuing section 114 notices, with Thurrock Council, Sandwell Metropolitan Borough Council and Slough Borough Council also receiving letters about their current financial positions.

In a letter sent by the Department for Levelling Up, Housing and Communities (DLUHC) to Croydon's commissioner, Tony McArdle, the Government said the decision came despite Croydon benefiting from £145m of capitalisation financial support from Government since 2020.

The Department for Levelling Up, Housing and communities (DLUHC) said the proposals come in light of recent findings by Croydon's Improvement and Assurance Panel and due to the council's November 2022 section 114 notice.

In a second letter sent to Croydon's Chief Executive, the DLUHC set out its concerns regarding the council, noting that there has been a delay in the council taking an "effective grip of the key issues it has faced since 2020," when it issued its first section 114 notice.

On financial governance, the letter stated that there is evidence of poor record keeping and budget management, alongside an overall "lack of strong grip on financial management".

Historic issues continue to be discovered, with current financial pressures made up of £161.6m of errors in historic accounts that require correction, the letter added.

Croydon is also carrying £1.6 billion in debt, meaning its general revenue budget cannot meet its residents' needs without Government support.

The letter also suggested that a culture "whereby difficult decisions were not taken and implemented has been allowed to embed" within the authority over several years.

The DLUHC set out a proposed intervention package in light of these issues, which would see directions issued requiring Croydon to follow the Panel's instructions as a necessary and expedient action to secure compliance with their Best Value Duty if the Panel are not satisfied with the progress being made.

In addition, the DLUHC proposed that the improvement panel have access to any premises of the council, any document relating to the council and any employee or member of the council.

Progress reports will be made to the Secretary of State every six months under the proposals.

All interested parties now have until 30 March to make submissions in response to the DLUHC's proposed intervention.

Earlier this month, an independent report into the circumstances leading to the first section 114 notice was released to the public, two years on from its completion. The report detailed “organisational dysfunction at the most senior level” and recommended the council consider pursuing formal action against senior members and officers.

The DLUHC meanwhile issued three further letters to Thurrock Council, Sandwell Metropolitan Borough Council and Slough Borough Council.

Writing in a ministerial response to Slough Borough Council's chief executive, Gavin Jones, Local Government Minister Lee Rowley said he is concerned after reading the council's latest report on its position.

Rowley wrote: "It is clear there has been an unacceptable lack of urgency and focus by the council to resolve the situation it has placed itself in. This must change."

Slough issued a section 114 notice in 2021, blaming the effects of the Covid-19 pandemic and a "compassionate" approach to council tax and business rate collection. Commissioners have been embedded in the council since then.

Writing yesterday, Rowley said that he is "troubled to hear there are individuals and leaders within the council who do not recognise the need for cultural change”.

He added: "I expect the Council's leadership to recognise this and act accordingly to deliver the transformation Slough needs."

He called for a metric-based assessment from the Commissioner Team and the council, which includes a look at the council's progress, including financial progress and progress on implementing a model for cultural change within the local authority.

In a letter to Thurrock Council, the DLUHC informed the local authority that its commissioners at Essex County Council would be handed more powers.

The expanded intervention will see Essex provide additional powers over:

• All functions associated with the governance, scrutiny and transparency of strategic decision-making by Thurrock;
• All functions associated with Thurrock's operating model and the redesign of council services to achieve value for money and financial sustainability;
• All functions relating to the appointment and dismissal of persons to positions the holders of which are to be designated as statutory officers and the designation of those persons as statutory officers;
• All functions to define the officer structure for the senior positions at Thurrock, determine the recruitment processes and then recruit the relevant staff to those positions; and
• All functions pertaining to the development, oversight and operation of an enhanced performance management framework for officers holding senior positions.

The letter also calls on Thurrock to implement a raft of plans to reconfigure its services to be in line with its finances, ensure that the council has sufficient personnel to deliver its recovery plan, and strengthen its governance functions.

In December last year, Thurrock's commissioners reported a £470 million in-year funding hole in Thurrock's finances. The Government later moved to expand its intervention citing "unprecedented" challenges at the local authority.

Rowley's letter to Sandwell meanwhile noted that there "remains a lot to be done" but welcomed its plans to work on the 'customer journey' and on the culture within the council.

"In your report, you highlight an increased self-awareness in both the Council's approach to improvement and its everyday functions," he added.

"The increased focus on residents being central to the decision-making is a positive step, if long overdue. It will be crucial to see how the improvement work is fully embedded as sustained practice at the council as it moves forward; this should be a key priority for the new Chief Executive, Shokat Lal."

Adam Carey