A report into the Croydon Council’s bankruptcy has revealed details including the order to destroy evidence as the Labour-led council struggled to balance its books.

The Penn report, put together by Richard Penn of the Local Government Association, was made fully public on February 24 after long anticipation and its partial leak last year. 

The 150-page report, backed up by statements from former council members, begins with shocking statements from both former and current council members on how some former members lied about council finances.  

One interviewee said: “I have been told that the [former] Cabinet Member for Finances and Resources always wanted to paint the rosiest picture.” They further added: “I was aware he had been saying things like ‘don’t tell them how bad it really is or that it’s getting worse’.”   

The same interviewee also pointed to the former Cabinet Member for Finances and Resources giving clear instructions to burn slides referencing the Section 114 Notice which bans all new spending when issued, excluding ongoing commitments and spending on the protection of vulnerable people.   

They said: “Issuing an S114 was regarded as totally unacceptable and the ultimate bad news.”    

‘Strong Leader’

The report continues with numerous interviewees being unsupportive of the “Strong Leader” model, which usually favours the majority party, adopted in 2010. 

The report points out the concerns over the “Strong Leader” model by the council members, as one interviewee said the adaptation of the model was a mistake regarding Croydon’s highly political environment.  

Another interviewee added: “I was very sad about the decision to stay with the “Strong Leader” model.”  

Interviewees also expressed confusion and borderline animosity about the relationship between elected members of the council and executive council staff.   

One interviewee said: “The former Chief Executive constantly used excuses to close down debates with us councillors and imposed her authority on us.”   

The same interviewee also accused the former Chief Executive of being intent on pushing elected members aside and preventing information flow to them.  

The interviewee named numerous decisions and information that have been withheld from council members such as the scale of overspending in 2019-2020, the breach of treasury management limits and details of loans to Brick by Brick.  

The Brick by Brick initiative, of which the Croydon Council is a shareholder, was established in 2016 to deliver quality and affordable housing to Croydon residents.  

Decisions and talks especially about the Brick by Brick initiative seemed to gather the attention of many interviewees.  

An interviewee expressed concern about the indifference and silence of executive staff on the Brick by Brick initiative when councillors asked questions about it.   

They said all previous loan agreements, worth £200m, to the initiative, seemed to happen in line but also added “Brick by Brick asked for more and more money, and it was given it” regardless of previous loans.   

It is mentioned by this interviewee that there were no formal accounts of the loans and no one was keeping an eye.  

Penn highlights, in conclusion, that the term “collective corporate blindness” seems to be the term the most agreed with by interviewees to describe the situation.   

His interviews revealed great evidence of Croydon council being a highly dysfunctional organisation, as public money was being spent in disregard to public decision-making and financial controls.  

Out of the 60 interviewees, none of them is named due to privacy reasons.  

Mayor Perry said he was happy to finally release the report as it was in the public interest.