Agenda item

Brexit - Planning for the future

Meeting of Cabinet, Monday, 14th December, 2020 6.30 pm (Item 98/20)

Cabinet Member: Leader of the Council, Councillor Hamida Ali

Officer: Interim Chief Executive, Katherine Kerswell

Key decision: no

Decision:

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1. Note the potential impact and responses to Brexit in Croydon, as set out in the report.

2. Endorse the statement that ‘Croydon is open’ for business and that everyone in our diverse communities is welcome.

3. Ensure businesses are aware of the EU citizens’ rights to residency and employment as they are confirmed and support businesses’ access to advice and guidance.

4. Agree that regular updates be provided to all councillors and relevant stakeholders for each of the key categories outlined in the report.

5. Continue to support the Mayor of London’s #LondonIsOpen campaign.

Minutes:

The Leader introduced the report, which outlined the implications of Brexit for the borough, including a ‘No-deal’ scenario. The council was acting to identify and seek to limit the risks and effects of Brexit to the organisation and communities in Croydon. As detailed in the report, Brexit would potentially cause negative effects, including: increases to interest rates, inflation to tariffs and the level of uncertainty of how the local economy would react. Cabinet Members had heard directly from EU nationals in the community who contributed to a past Cabinet meeting and this paper additionally highlighted staff members in that category, about the impacts on their families. Appendix A of the report summarised the range of activity the council was engaged in responding to the implications of Brexit in terms of the local economy, employment and workforce arrangements, council finance and procurement and community safety and cohesion.

The Brexit Working Group was an internal body to the council which sought to cover policy areas and worked to identify risks, actions and monitor functions – ensuring they were a part of the council’s corporate risk register. The report detailed implications for sectors who were also adversely affected by the pandemic, for example hospitality, construction and the operation of the care sector. There were implications for existing loans, investments in relation to the pension fund, the potential risk of reducing business rates, the impact of increased demand across communities due to rising unemployment, a potential increase in poverty and uncertain community safety and cohesion. In the wake of the referendum, there was a rise in the level hate crime which had reduced to pre-referendum levels.

The Executive Director of Place stated that the report set out clearly the implications for the four main areas, as set out in Appendix A, in a local and national context. Additionally, there was the uncertainty around further impact of Covid in a changing situation. She drew attention to Item 5.2 of the report, Table A: Percentage of jobs filled by non-UK EEA nationals, and stated that the six sectors accounted for 68,000 jobs in Croydon. If the London-wide proportionality was applied, 11,500 non-UK EEA nationals were employed in these sectors across Croydon. As well as the more generalised risk mentioned, there were also more specific risks for Croydon including borrowed money from European Banks and pension investments in European markets. In terms of the community, there had been approximately a 16% increase in hate crime in the borough following the referendum. These were all factors which the Brexit Working Group had been considering when compiling the risk register and action plan.

The Cabinet Member for Economic Recovery & Skills listed the impacts of Brexit on business, employment and economy in Croydon. In February 2020, the council organised a conference at Fairfield Halls with over 200 businesses in attendance, representatives from the London Chamber of Commerce and Industry (LCCI), London Business Hub and the Federation of Small Businesses. Many views and concerns of businesses were captured at the conference and fed into the report. In the run up to Brexit, businesses had held off spending and investment due to the uncertainty, which had major implications for local authorities in terms of their budgets and local economies. Since February 2020, Covid brought on an additional set of complex pressures and businesses had faced lockdown restrictions which had a huge economic impact.

There was a lot preparation required ahead from businesses at the end of the transition period, however it was currently unknown what the new arrangements were that businesses would legally have to adhere to. The council was working closely with the Mayor of London who had launched a new online portal which brought together key online resources from a range of partners to support businesses in understanding how to prepare for the end of the transition period. There was also an EU Exit Hub resource provided by the LCCI to support supply chain services and contracts who would be impacted from 1 January 2021. There was a significant risk of a skills shortage, as represented in the figures for the number of EU citizens in certain sectors, which added to the uncertainty faced by businesses.

The Cabinet Member for Culture & Regeneration stated that there was currently a lot of uncertainty for the business community, particularly in the eventuality of ‘No-deal’. It was important for the council to signal its support in these uncertain times to the business community because they were job and livelihood creators in the borough. The Administration would continue to hold the government to account in the immensely challenging economic climate.

The Cabinet Member for Communities, Safety & Resilience drew to the community safety and cohesion element of the report and highlight the hostile impact of the referendum on hate crime statistics at that time. During the lockdown, the borough had again seen an increase in hate crime, which the Safer Croydon Partnership would be closely monitoring and incorporating into the work programme. The report flagged ongoing work with Croydon’s faith and community sectors in terms of monitoring community tensions and awareness. It was important for the council to send out a message to all EU citizens of their valuable and contribution to the borough. In the stressful economic financial climate of Brexit it was likely that some people would direct their anxieties on community groups, which would be monitored.

The Cabinet Member for Homes & Gateway Services stated that the Home Office revealed new post-Brexit immigration rules would come into force on 1 January 2021, as quoted in the magazine ‘Inside Housing’ in October 2020. These rules would mean people with a history of rough sleeping may have their application to remain either cancelled or refused. Homelessness charities had branded this approach cruel and dehumanising. She asked how the new immigration rules would impact Croydon. In response, The Executive Director of Place stated that it was too early to predict the precise nature of the impact. There had been proactive work by the council to mitigate the risks around housing and unemployment by ensuring people were engaging with and understanding how to navigate the EU Settlement Scheme. This applied to council staff, providers and contractors.

The Cabinet Member for Children, Young People & Learning stated that there were 1.7 million children in the country living in food poverty, which would be exasperated by Brexit. It was important to move forward with a strong employment strategy and support communities to empower themselves because with lower financial support for families there would be a rise of children in the borough facing hardship, adding that this was a matter of public health.

The Shadow Cabinet Member for Economy & Jobs said that the report stated that part of the support given to local jobs included using Growth Zone to create jobs. A comment from the PricewaterhouseCoopers (PwC) in their recent strategic review report was that gross loan borrowing had been managed better than the rest of the council finances. However, when considering the gross loan estimates of over £300 million extra borrowing in its lifetime, whilst the council struggling to keep works afloat, how could local businesses or business associations in Croydon expect the programme laid out in the Brexit strategy to help broaden employment now or in the future. In response, the Executive Director of Place stated that £300 million was a significant amount of money, but it was money estimated to be available to spend due to the growth in business rates and refocussing the spend of that growth towards local economic recovery, rather than providing major infrastructure for growth - as detailed in the report. The strategy was not about quitting works, but reviewing programmes and seeing if there was any external available support for those programmes given the financial challenges.

The Leader of the Opposition stated that challenges associated with Brexit had been known for some time and the report was particularly negative in light of the withdrawal agreement guaranteeing the rights of EU citizens and the business support available. The best way to support business was to work closely with them and fully deliver the Covid support grants, where Croydon ranked nationally in the lowest 10%. The council would be further hindering local business by removing free parking across the district centres and high streets. Most significantly, the council bankrupting the borough was the most harmful act to local businesses in the borough, which could not be attributed to the effects of Brexit or Covid. In response, the Leader highlighted that the report specifically set out how the council would mitigate the effects of Brexit on businesses and communities in the borough. The extent to which the council could influence those effects was limited due to negotiations being led by central government, who had left critical Brexit arrangements to the final hour leaving businesses with uncertainty and little capacity to prepare for 1 January 2021.

The Cabinet Member for Economic Recovery & Skills stated that the council was working with the business community to ensure they were providing the support described by the Leader of the Opposition. They were distributing the mandatory and discretionary business grants and it should be noted that the level of funding from the government was not satisfactory cover and many business were not receiving enough money to front their rent costs. Following the Tier 3 lockdown announcement for London, the Administration and Opposition needed to work together to help the business community, stakeholders and partners to secure more funding and support. Despite Covid, there were new business coming to the borough and thriving shopping districts.

In response to the opinion of the report appearing negative, the Cabinet Member for Communities, Safety & Resilience stated that the 16% rise of hate crime during the referendum was a negative life experience for many residents in the borough and potential future rises had to be addressed and mitigated. The context of the report was to reassure residents, not scaremonger as suggested by Opposition Members.