The Cabinet meeting on 14 February 2024 discussed the Council's financial performance, the closure of Brick by Brick Croydon Ltd, and the budget for 2024-25. Key decisions included approving the closure of Brick by Brick Croydon Ltd with a potential loan write-off of up to £70m, proposing a 2.99% increase in the Croydon element of Council Tax for 2024-25, and noting the HRA revenue budget forecast of an overspend of £12.0m.

Mayor's Business Plan 2022-2026 Performance Report

The Cabinet received an update on the performance against the Mayor's Business Plan 2022-2026. Councillor Lynne Hale, Cabinet Member for Homes and Deputy Mayor, highlighted improvements in the Housing department, including a reduction in legacy voids and the stabilization of the NEC IT system. Councillor Maria Gatland, Cabinet Member for Children and Young People, noted positive work in reducing the number of 16 and 17-year-olds not in education, employment, or training (NEET), and improvements in the Education, Health and Care Plan (EHCP) process. Councillor Yvette Hopley, Cabinet Member for Health and Adult Social Care, reported that key performance indicators for safeguarding intervention, long-term care for over 65s, and supporting independent living for this age group were in the green zone. Councillor Andy Stranack, Cabinet Member for Communities and Culture, shared positive feedback on the London Borough of Culture programme, which had reached over a million people. Councillor Ola Kolade, Cabinet Member for Community Safety, detailed efforts to improve safety through the Safer Croydon Partnership, including a new youth outreach programme and quicker responses to street robberies. Councillor Scott Roche, Cabinet Member for Streets and Environment, noted improvements in fly-tip removal, but acknowledged ongoing concerns about the overall volume. Councillor Jason Cummings, Cabinet Member for Finance, reported a breakeven forecast for the General Fund revenue budget, with service directorates working to manage overspends. The Cabinet noted the Council's ongoing dialogue with the Department for Levelling Up, Housing and Communities (DLUHC) regarding its significant historic legacy debt.

The Executive Mayor in Cabinet resolved to note the performance report, including data on council and partnership performance, and actions being taken to improve outputs.

Brick by Brick Closure Report

The Cabinet approved the formal commencement of the process to wind down Brick by Brick Croydon Ltd on a solvent basis. This decision follows a period of significant financial challenges for the company, which was established in 2014 to address the shortage of homes in Croydon and increase the supply of affordable homes. The company has delivered 751 residential units, of which 385 were affordable. However, the Council will have to write off a significant loan balance, estimated between £62m and £68m, due to the company's non-repayment of debt.

The Cabinet delegated authority to the Corporate Director of Resources, in consultation with other relevant directors and the Executive Mayor, to negotiate the sale of Brick by Brick Croydon Ltd if a financially advantageous offer is received before the proposed wind-down date. They also delegated authority to approve the final loan principal write-off amount, up to £70m, and to appoint new directors to the board of Brick by Brick Croydon Ltd.

Budget 2024-25 and Medium Term Financial Strategy 2024-28

The Cabinet considered and approved the proposals for the 2024-25 revenue budget and council tax levels. This includes a 2.99% increase in the Croydon element of Council Tax, equating to £53.98 per year for a Band D property, and a 2% increase in the adult social care precept levy. These increases are within the national referendum cap limits. The report detailed proposed savings, demand pressures, inflation allowances, legacy financial issues, and debt servicing costs, highlighting that Croydon's debt servicing costs as a percentage of core spending power are significantly higher than the national and nearest neighbour medians.

The Cabinet noted the Council's request for a Capitalisation Direction of up to £38m from the Department for Levelling Up, Housing and Communities (DLUHC) for 2024-25, with an additional legacy request of £9.439m for 2019-20. The Council expressed concern that the continued use of Capitalisation Directions, which add to Croydon's debt burden, does not provide a financially sustainable solution. Dialogue with the government continues regarding alternative forms of financial support, such as a £540m debt write-off.

The Cabinet also approved proposals to introduce new additional council tax charges in relation to empty properties and second homes, which are designed to bring more empty homes into productive use and generate greater income.

The Cabinet resolved to recommend to Full Council the approval of the 2024-25 net budget requirement of £361.267m, the Council Tax Requirement of £259.761m, and the detailed programme of revenue savings, income, demand pressures, and legacy budget corrections.

2023-24 Period 8 Financial Performance Report

The Cabinet received an update on the Council's financial performance as at Period 8 (November 2023). The General Fund revenue forecast indicated an overall underspend of £1.3m, after accounting for the budgeted utilisation of £63m in capitalisation directions. The Housing Revenue Account (HRA) revenue budget, however, was forecast to overspend by £12.0m. The General Fund capital programme showed a forecast underspend of £20.7m, while the HRA capital programme had a forecast overspend of £1.8m. The report reiterated that the Council's historic borrowing and debt burden remains critical to the non-sustainability of the revenue budget, and dialogue with DLUHC continues regarding further financial support.

The Cabinet resolved to note the financial performance reports for the General Fund, HRA, and Capital Programme, and the ongoing dialogue with DLUHC regarding financial support. They also approved an inter-directorate virement of £2.1m non-pay inflation budget from Adult Social Care & Health to Housing.

Repairs Contracts Update

The Cabinet received an update on the mobilisation and performance of the new housing responsive repairs contracts with Mears, Wates, and K&T Heating, which commenced on 1 August 2023. It was noted that call volumes had been significantly higher than expected, placing the service and staffing under intense pressure, leading to higher staff turnover and sickness. An improvement plan has been developed, focusing on recruitment, training, IT enhancements, and real-time performance monitoring. The report also highlighted progress in reducing legacy voids and resolving overdue complaints.

The Cabinet resolved to note the progress following the mobilisation of the new housing repair contracts and to agree the actions proposed in the report, with an update to be provided within six months.

HRA Rent Setting 2024-25

The Cabinet agreed to recommend to Full Council an increase in social rents of 7.7% from April 2024, based on the government's Social Housing Rent Policy (applying September 2023 CPI + 1%). Tenant service charges will also increase by the same level. The continuation of the HRA hardship fund was agreed, subject to obtaining further direction from the Secretary of State. A nil increase was agreed for garage rents, with a review of asset viability planned for 2024-25. An increase in caravan site plot charges of 6.7% (September CPI) was also agreed. The report indicated that this rent increase was necessary to fund increased expenditure on repairs and planned maintenance, anti-social behaviour, caretaking functions, grounds maintenance, and parking, as identified in tenant surveys.

HRA Business Plan and Budget Update 2024-25

The Cabinet recommended to Full Council the approval of the proposed HRA budget for 2024-25 and the update to the HRA 30-year Business Plan. The plan demonstrates that investment proposals are fundable, subject to assumptions, and that the HRA remains sustainable over the 30-year period. The budget reflects increased pressures on repairs and maintenance costs, with a 33% growth in the responsive repairs budget proposed. This growth is targeted at addressing historical under-investment, damp and mould issues, compliance with the Social Housing (Regulation) Act 2023, clearing legacy voids, and tackling legal disrepair claims. The plan also includes investment in building safety works and energy efficiency improvements.

The Future of the Experimental Healthy Neighbourhoods

The Cabinet resolved to make permanent six of the seven experimental Healthy Neighbourhoods: Albert Rd, Dalmally Rd, Elmers Rd, Holmesdale Rd, Parsons Mead, and Sutherland Rd. These schemes have demonstrated benefits in road safety, with reductions in traffic speed and collisions, and improvements in air quality. The Kemerton Rd Healthy Neighbourhood will be removed as it was considered to be a standalone road with no wider scheme benefits and received negative feedback from residents. Officers will work with residents on adjustments to Holmesdale Rd, Albert Rd, and Sutherland Rd schemes to mitigate the impact of displaced traffic.

Capital Programme and Capital Strategy 2023-29

The Cabinet approved the Council's 2023-29 General Fund Capital Programme, which includes planned expenditure of £479.68m. They also approved incurring nil General Fund borrowing for 2023-24 and 2024-25, with borrowing of £164.67m projected over 2025-29. The 2024-25 Housing Revenue Account (HRA) Capital Programme was approved with an investment of £57.24m and nil borrowing. The 2023-24 HRA capital budget was increased by £3.914m to £37.162m, funded by HRA reserves, due to increased major repairs and improvements. The Council's Capital Strategy was also approved. The report highlighted the Council's ongoing dialogue with DLUHC regarding its significant historic legacy debt and the search for further financial support.

Treasury Management Strategy Statement, Minimum Revenue Provision Policy Statement and Annual Investment Strategy 2024/25

The Cabinet agreed to recommend to Full Council the approval of the Treasury Management Strategy Statement 2024/25, the Prudential Indicators, the Annual Minimum Revenue Provision Policy Statement, the Borrowing Strategy, and the Investment Strategy. The report detailed the Council's treasury management objectives, which are to manage cash flows, borrowing, and investments while minimising risk and maximising investment yields within agreed risk parameters. The Council aims to achieve a sustainable debt to net revenue stream ratio of 2.5.

Review of Council Tax Care Leavers Relief Scheme

The Cabinet agreed to update the Council Tax Care Leavers Relief Scheme (CLRS) to only support care leavers where Croydon Council is the corporate parent. This means that care leavers placed in Croydon by other Local Authorities will no longer receive this specific relief from Croydon. The scheme will also be updated to only support care leavers who are named as the liable party for Council Tax. The report noted that this change aligns Croydon with the practice of many other local authorities and aims to ensure the scheme remains financially viable and sustainable. The Cabinet also agreed to continue the HRA hardship fund to assist tenants financially impacted by the rent increase, subject to further direction from the Secretary of State.

Croydon Companies Supervision and Monitoring Panel - Update Report

The Cabinet noted the status of Council companies, excluding Brick by Brick (Croydon) Limited, as reported by the Croydon Companies Supervision and Monitoring Panel. The report indicated that work was underway to establish separate bank accounts for Croydon Affordable Homes Charity and its active LLPs. The submission of accounts for Croydon Affordable Housing LLP and Croydon Affordable Tenures LLP had been granted an extension. The board of Croydon Enterprise Loan Fund (CELF) Limited had agreed to wind up the company, and the Council was reviewing options for residual loans. Pegasus Academy Trust had been removed from the company matrix.

The Cabinet also noted the forward plan for the CCSMP, which includes updates on Croydon Affordable Homes and Croydon Affordable Tenures, and a review of charities and park covenants.