The BREXIT verdict ‘has major implications for local authorities in terms of their budgets, local economies, regulatory framework, community cohesion and the prospects of further devolution’ says the report to Croydon’s Cabinet meeting on 11 July.
The Cabinet is being asked to
- ‘Endorse the statement that citizens of the European Union are welcome in Croydon; the Council values the enormous contribution they make through working, paying taxes, and taking part in civic and cultural life. Croydon is an open society and is proud of its diversity;’
- ‘Note that the Council and its partners will be vigilant in identifying any hate crime and will not hesitate to take vigorous action against the perpetrators;’
- ‘Endorse the statement that Croydon is open for business and that plans are in place to safeguard our growth plans that will bring opportunities for local business and jobs for local people;’
- ‘Note the Council’s plans to monitor developments over the coming months and take action to mitigate any threats posed by the vote to leave the European Union.’
Inclusion and Diversity
The report to Cabinet states that it welcomes and endorses the recent statement by the new Mayor of London. ‘Croydon is an inclusive borough, proud of the diversity in our society and value the contribution that all communities make. We will continue to work to strengthen community cohesion in Croydon and will not hesitate to employ the full powers of the Council with our partners to tackle any hate crime that should occur.’
‘Croydon remains open for business and has plans in place to take the necessary action to ensure that our growth plans remain on course and offer opportunities for businesses and jobs for our residents.’
The Council is monitoring the three ‘broad phases of reaction to the decision to leave the EU’: initial volatility, medium term uncertainty and longer term transition.
It is ‘planning measures to safeguard the prosperity of Croydon and community cohesion in the borough, mitigating risks and considering new mid- to long-term opportunities. It is preparing for any potential further local government cuts following the government’s Autumn Statement 2016.’
The report sets out how it will react to an increase in hate crime, mainly through partnership working. Comment: The one set of actions that the public can judge will be whether the Graffiti Removal Service removes all graffiti that is racist or offensive within 48 hours of reporting.
It fears that the ‘fall in Sterling, downgrading of the UK’s sovereign credit rating, prolonged equity market volatility and a fall in bond values threatened by possible further Quantitative Easing, are all significant challenges both for the economy and the Council.’
Potential Adverse Effects
It is concerned that the development of Croydon may be adversely affected in relation to:
- ‘Economic confidence delaying investment decisions by manufacturers, retailers and office occupiers.’
- ‘International occupiers …. potentially moving their operations elsewhere to benefit from single market access, leading to an impact in the commercial market.’
- Investment sentiment being ‘affected in similar ways to before the referendum, probably leading to increased yields.’
- ‘Development and construction – ‘major schemes which have not yet started on site are likely to be delayed until there is more clarity about the level of demand in the economy’ especially planned office development. ‘(R)esidential development is least likely to be affected. Infrastructure and public sector development are also less likely to be affected, at least in the absence of any further public spending controls.’
- ‘With regard to specific major schemes in Croydon, the Council maintains a close dialogue with major developers and investors regarding their interests in Croydon. In general, their outlook for Croydon post-Brexit is positive.’
- The Council’s arms length development company Brick by Brick will not be affected.
- ‘Croydon Limited Partnership has confirmed ‘that it is business as usual for them’ re-the Westfield/Hammerson (Whitgift).
- Ruskin Square ‘remains firmly on track’. Stanhope ‘consider that the demand for new, high quality, affordable and well-connected business accommodation is likely to remain strong, as is the demand for homes for Londoner. Their strategy for this development has not changed.’
- Menta ‘ have confirmed that there are no changes to their approach on the current phase’ on the Morello project The’ sales rate of residential units … may slow a little this will not have an impact on value. For future phases of the scheme, particularly the Morello Tower, they will continue to monitor the market closely to ensure the Croydon value context supports the development.’
- Taberner House. The Council is ‘in advanced discussions with a development partner regarding the residential-led development …The development partner has confirmed that there are no changes to their offer or development programme for the site arising from the Leave vote.’
Comment. Note that there is no mention of the Councils Fairfield Halls/College Green scheme, or other developer projects such as for St George’s Walk area.
The report cites uncertainties about potential further cuts in the Autumn Budget statement, and the risk to a reduction in business rate receipts in any economic downturn, as the Council begins to retain business rate income up the full 100% by 2020.
It does not think that its borrowing of £25.745m from the European Investment Bank for schools projects and its further potential borrowing facility for £102m in total, to be drawn by December 2018, will ‘be affected by leaving the EU’. But ‘there is now an added uncertainty of the interest rate’. ‘The ability of the Council to borrow a further sum in support of our regeneration programme will depend on future exit negotiations.’
Council’s Pension Fund
It considers that its ‘strategy of asset diversification serves to mitigate the immediate effects of financial turbulence’. But it will be closely monitoring any adverse effects.
Since 2012 Croydon has received £2.856m for projects, since completed, that have supported growth in the SME sector and increased the employability of young people and the long-term unemployed. It is waiting the outcome of its bid for £2 through the London Local Enterprise Partnership (LEP). It may also be able to bid for further funds for spending up to 2020 subject to clarification of any change in the rules due to BREXIT.
‘The voluntary and community sector (VCS) will be affected by the loss of funding opportunities in the medium term’. ‘While there is a theoretical risk that a downturn in economic activity in Croydon would result in a reduction in CSR funding for the sector, the sums involved are not large and there is no evidence to date that this will happen.’
The Council hopes that the devolution of power from the EU will lead to an increase in powers to local authorities, and that its policies will lead to putting local communities at the heart of decision making, by reinvigorating grass roots engagement and increasing communities’ responsibility.
EU regulations impact on council services such as waste, employment, health and safety, consumer protection and trading and environmental standards. ‘The end of procurement rules and state aid might see many more freedoms for the Council to operate and to invest in local business. EU regulations on procurement have been codified as UK law, so no changes are anticipated until the UK parliament legislates otherwise. It is not yet known how the provider market will respond and there is a possibility that some EU providers might choose to cease operating in the UK; however, this is unlikely to happen until the UK’s exit strategy becomes clearer.’
The Council reports that the most recent data – from the 2011 census – shows that 23,854, 6.6% of Croydon residents, held EU passports and 28,766, 7.9% of residents, held passports from other parts of the world.