The council
London Borough of Croydon effectively declared itself bankrupt in November 2020, issuing a Section 114 notice after accumulating roughly £1.6 billion in debt. The council now pays approximately £86 million a year in interest alone — money committed before a single pound reaches roads, libraries or social workers. The Crown Prosecution Service reviewed the conduct behind the collapse and concluded that negligence and incompetence do not meet the legal threshold for misconduct in public office. No official has been criminally charged.
The mechanism: Brick by Brick
The council created Brick by Brick as a wholly-owned property development company, driven forward by Jo Negrini, then Chief Executive. The council lent the company over £200 million and sold it public land, in some cases for as little as £1. Colm Lacy, a former council employee with no prior property development experience, was appointed to run it on a salary exceeding £150,000. In eleven years and having borrowed over £200 million, Brick by Brick built three council homes. An administrative failure to register as a provider of shared ownership homes meant the company's flagship housing programme collapsed outright, because buyers could not obtain mortgages on the properties. When the council finally wound the company down in 2026, it wrote off £68 million.
The Fairfield Halls project shows the same pattern at smaller scale. A £30 million refurbishment of the council's arts venue was awarded to Brick by Brick without a competitive tender. The final cost reached £73 million, the project ran three years over schedule, and the building was handed back unfinished and leaking. Auditors found the contracting structure had been designed specifically to sit outside normal procurement law, rather than merely fail to comply with it — a distinction worth holding onto, since it separates a process that broke down from one built to avoid scrutiny in the first place.
Warnings that were not acted on
Grant Thornton, the council's external auditor, issued five consecutive formal warnings beginning in 2017, including an explicit 2018 warning that reserves were dangerously low. Negrini did not respond to urgent internal calls for action as late as April 2020, and separately is reported to have known about major cost overruns at Fairfield Halls since 2018 without informing the cabinet. She left the council in 2020 with a £613,895 exit package, the largest paid to a council chief executive in England that year. Tony Newman, council leader throughout the period the key decisions were made (2015 to 2020), was suspended by the Labour Party for four years and reinstated in 2025; his public position has been that "things can go wrong without there being any wrongdoing" and that decisions were taken in good faith.
Governance compromised at the level that should have caught this
Allison Butler, Cabinet Member for Housing with oversight of Brick by Brick, was married to Paul Scott, chair of the council's Planning Committee, which approved the company's planning applications. Scott, who also worked for an architecture firm, was granted a "special dispensation" in a closed meeting allowing him to avoid declaring a conflict of interest while chairing the committee that approved Brick by Brick's schemes. He is reported to have pressured other Labour members to approve applications, warning that rejecting one risked all of them. Every one of Brick by Brick's more than 40 planning applications was approved.
When PricewaterhouseCoopers later investigated, they found Brick by Brick did not have a finance director at all, and that a material portion of its loans were already in default while the company was simultaneously requesting further funding from the council that owned it.
Richard Simpson served as Croydon's finance director and was also the first director of Brick by Brick — the same individual holding the personal statutory duty to flag unlawful or unsustainable spending was embedded inside the company that was generating it. Simpson left the council quietly in December 2018, as financial warnings were mounting, and moved to a senior regeneration role at Sutton Council. He remains under investigation by his professional accountancy body over his role in Croydon's collapse — the same pattern already established at Thurrock and Woking, where accountability for a Section 151 officer has run through professional regulatory bodies rather than criminal courts. No criminal charge has followed any of the three collapses.
Suppression, not just failure
Beyond the governance breakdown itself, the council actively worked to keep the scale of the problem hidden: internal reports on Brick by Brick's performance were suppressed for roughly two years, and the council attempted to sue a local journalist, Steven Downes, to stop him publishing findings he had obtained through Freedom of Information requests. This is worth separating clearly from the underlying financial mismanagement: concealment and an attempt to silence scrutiny through litigation is a materially different and more serious pattern than a control simply failing to work.
Why the safeguards that should have caught this were not there
Two national-level changes removed exactly the mechanisms that might have intervened earlier. The power to personally surcharge a councillor for reckless financial decisions was abolished by the Local Government Act 2000, removing the one legal route that could have made an individual, rather than only the taxpayer, bear a direct financial consequence. The national body that had provided independent local audit oversight was abolished in 2010, weakening the external check that might have escalated Grant Thornton's warnings sooner or with more force. Croydon's own chief executive confirmed on the record in 2023 that no replacement mechanism of equivalent weight currently exists.
A proposed public inquiry into the collapse was blocked by central government; reporting behind this case attributes that, at least in part, to a full inquiry's likely finding that central government itself had actively encouraged councils to borrow cheaply and invest commercially to offset a 40% reduction in core funding during the preceding decade — making Westminster a less than disinterested party in how thoroughly Croydon's specific failures were examined.
The training point
Every individual failure here — an unqualified appointment, an unregistered shared-ownership scheme, an uncompeted contract, an undeclared conflict of interest, a finance director embedded inside the company he was meant to oversee — is a distinct and separately identifiable governance gap, not one single catastrophic decision. That is the more useful lesson than "Croydon went bankrupt": a council collapse of this scale is very rarely one bad call, it is a sequence of individually survivable failures that were each allowed to continue because no single mechanism — internal audit, external audit, the Section 151 duty, the planning committee, the press — was independent enough, or empowered enough, to stop it early.