Croydon Council backs proposals to take legal action against former CEO amid financial crisis

Croydon tram
Last year Croydon’s chief financial officer warned that the council was unsustainable and would not be able to continue without a new model of support from government. Credit: PA

Croydon Council has backed proposals to launch legal action against its former chief executive in a bid to recover some of her settlement of more than £400,000 amid the local authority's dire financial situation.

Croydon's mayor says that he will pursue those who are responsible for bankrupting the borough three times over, leaving it with £1.6 billion of debt.

The council announced on Thursday it was referring some councillors to the Met, and would pursue its former Chief Executive for a settlement payment of almost half a million pounds as it attempts to balance their broken books.

Jason Perry says former councillors wracked up debt by wasting money on hotels, shopping centres and development companies

Jo Negrini was awarded £437,973 when she left the council in August 2020. Council members gave their backing for legal action to recover as much of Ms Negrini's settlement payment as is legally possible at a cross-party meeting on Thursday.Croydon first declared itself bankrupt in 2020 and was given a central government bailout loan. The council needs to pay £47m each year to meet the £1.6bn debt.

Last year Croydon’s chief financial officer warned that the council was unsustainable and would not be able to continue without a new model of support from government.

The council said it would be taking "unprecedented action to hold former senior leaders to account for misconduct, wrongdoing and failures in governance that contributed to the authority’s financial crisis".

The council is negotiating with the government for further support to address its serious financial problems including writing off the £1.6bn toxic debt that is hampering the council’s recovery and ability to function properly.

The crisis is directly hitting local people's pockets, with council tax bills set to rise sharply in April after the council approved a rise of 15% to help fix its troubled finances. The rise will cost the average household in Croydon an extra £235 each year.

The council set out a series of measures on Thursday, including referring the Penn and Kroll report on the council’s failures to the Metropolitan Police as well as referring individuals to relevant professional institutions.

The Penn report, published in February, followed an the investigation commissioned through the LGA and conducted by Richard Penn, into the reasons for Croydon’s financial collapse, looking at the actions taken by those in power at the time.

The Kroll report into the governance concerns and potential wrongdoing in relation to the refurbishment of the Fairfield Halls was considered together with the Rapid Review and the Penn report.Croydon’s Executive Mayor Jason Perry is also set to write to Michael Gove, the Secretary of State, the Committee on Standards in Public Life, the Chair of the House of Commons Select Committee on Local Government and the Chartered Institute of Public Finance and Accountancy (CIPFA), asking them to urgently review councils’ powers to hold individuals to account for catastrophic failures in governance. The recommendations were agreed unanimously by the council’s Appointments and Disciplinary Committee on Thursday.

Mr Perry said: "“Like so many residents I feel angry about what has happened to my hometown. I feel as strongly as they do that those responsible, ought to be held to account for their part Croydon’s downfall. “The scale and severity of Croydon’s financial collapse is unprecedented and that is why we are recommending unprecedented steps. The council has issued three Section 114 Notices; it has had to make savings of £90m over the last two years and another £36m this year; it has £1.6bn toxic debt in total and has had to seek permission to borrow £369m from government. “It is completely unacceptable that individuals who held positions of trust should escape the consequences of their misconduct. Nor should they be rewarded for their failures while our residents, businesses and partners continue to pay the price. “They must be held to account – that is why I have consistently pushed for the council to take the strongest possible action against those responsible. I will also be making the case to government that councils must have greater powers to hold former officers and members to account for misconduct – without risking further costs to the taxpayer. “This is something that I will be asking government to look at as a matter of urgency.”

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