Ex-Croydon Council leader hits back at leaked financial report

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After nearly two years of silence, the former leader and chief financial officer of Croydon Council has hit back at a leaked report calling it a ‘politically motivated witch hunt’.

The long-awaited Penn report was leaked to the local Inside Croydon website and the Municipal Journal.

The report, which was completed 18 months ago but until this week remained unpublished, is written by Richard Penn of the Local Government Association.

Mr Penn led an investigation into the council’s financial mismanagement before he was forced to issue a Section 114 notice, declaring bankruptcy effective in 2020.

After the report was completed, former leader Tony Newman and former finance cabinet member Simon Hall stepped down as adviser in March 2021.

Now Mr Newman claims there was ‘no evidence of wrongdoing’ on his or Mr Hall’s part and said the financial decisions were ‘made in good faith’.

He said: “The real losers in all of this are the people of Croydon. Instead of getting their questions answered, they have shadow actors trying to manipulate their perceptions and scapegoat former advisers who have limited means to defend themselves.

“We acted at all times with integrity and honesty. Simon and I are very sorry for the council’s financial crisis, but things can go wrong without wrongdoing.

“Had we known a pandemic was coming, of course, we would have looked for additional ways to protect Croydon’s finances.

“But to suggest that someone on the board broke the Nolan Principles is false and defamatory.”

While Mr Hall claimed the report was ‘subjective’ as it used anonymous interviews.

He said: ‘All who have been councillors, myself included, are deeply sorry for Croydon’s financial crisis and the strain it continues to place on public services and families in the borough.

“But it would be wrong to blame Croydon’s problems solely on spending decisions.

“It’s also about longer-term central government funding shortfalls, which we were powerless to influence.

‘For the avoidance of doubt, Croydon was forced to issue a section 114 notice due to a single ‘black swan’ event – namely the Covid shutdown, which stifled the revenue council while dramatically increasing costs.

“It was a perfect storm, and we couldn’t weather it due to years of underfunding and austerity, which left us with very limited financial room to manoeuvre.”

He claimed the pressure of ‘austerity-driven cuts’ is ‘huge’ and said there was additional pressure on the council’s budget as it deals with many unaccompanied asylum-seeking children.

Mr. Hall added: “We have spent many years tackling these challenges, often successfully and always in good faith.

“But these challenges will persist, even as Croydon recovers from the pandemic.

“The same challenges will continue to beset our borough if politicians are not honest or sane enough to address them.”

An excerpt from the report, published by the Municipal Journal, said: ‘Major risks to the council’s revenue budgets and to its investment portfolio appear to have been downplayed in the face of what appeared to have been unbridled optimism and apparent disregard almost reckless of the potential adverse consequences of these risks.

“By limiting its focus and attention to a small number of business, regeneration and other objectives, the council appears to have effectively blinded itself to its wider responsibilities.”

Despite the report leaking, Croydon Executive Mayor Jason Perry, who was elected in May, said he was “still committed” to officially releasing it.

He said: “I’m still determined to release it, but we have to follow due legal process. I am aware that we are protecting the pocket of municipal taxpayers.

“The commitment has always been there and remains.”

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