Bankrupt councils dish out £600k in ‘golden hellos'
Two cash-strapped councils have spent hundreds of thousands of pounds on 'golden hellos' for new staff despite declaring bankruptcy, The Telegraph can reveal.
Birmingham City Council handed individual payments of £1,000 to workers for agreeing to sign on between 2022 and last year, while Croydon Council paid them as much as £5,000 in the same period.
The sign-on bonuses were paid despite declining public services with Birmingham forced to dim street lights and cut bin collections as council tax soared 10pc last year alone.
Croydon, which declared bankruptcy in 2023, issued another £35m warning last year.
The cash incentives were given to dozens of new recruits to frontline local authority services, according to Freedom of Information requests made by The Telegraph.
Croydon spent £439,000 on starting bonuses between 2022 and 2024. It gave a 'welcome payment' of £5,000 to 74 staff during that time, while 15 received payments of £4,000 and three were paid £3,000.
In the same period, Croydon declared effective bankruptcy three times between 2020 and 2022, while Birmingham went bankrupt in 2023.
The starting bonuses at Croydon were approved amid a financial crisis at the town hall, which in November 2022 issued its third Section 114 notice, a legal mechanism that declares a local authority cannot balance its budget.
It raised council tax by 15pc in 2023, which pushed up bills for the average household in Croydon by £235 a year to over £2,000.
Croydon council taxpayers will see bills rise by 4.8pc between 2025 to 2026, with an average Band D property bill rising to around £2,480, a further increase of £113. Croydon is no longer under a Section 114 notice.
Elliot Keck, head of campaigns at the TaxPayers' Alliance, said: 'Residents in bankrupt Birmingham and Croydon will be furious that their councils have squandered hundreds of thousands on golden hellos.
'Taxpayers deserve answers, not more reckless handouts from cash-strapped town halls.'
The Conservative mayor of Croydon, Jason Perry, blamed 'toxic historic mismanagement' at the time. The council received a £136m bailout from the taxpayer in February after projecting an overspend of £98m this financial year.
Birmingham spent a total of £152,000 on its 'golden hello' scheme for new recruits. The initiative was introduced in 2022 to boost hiring in adults' and children's social care services, and by 2024 it had paid 152 new hires £1,000 each.
The council defended the scheme as necessary to tackle difficulties hiring new social care staff which it described as 'one of the most acute national workforce challenges'.
The city issued its Section 114 notice in 2023 and increased council tax by 10pc last year, with a further 8.5pc increase approved this year, taking the average Band D council tax to £2,236 a year.
A Birmingham City Council spokesman said: 'National bodies such as the Local Government Authority and British Association of Social Workers have repeatedly highlighted recruitment into adults' and children's social care roles as one of the most acute national workforce challenges, particularly within frontline health and social care roles.
'The introduction of a £1,000 golden hello for recruits into hard-to-fill posts such as qualified social workers and occupational therapists represents a modest, proportionate and evidence-based incentive aligned with sector-wide practices. We do not pay golden hellos for officers in senior leadership roles.'
Croydon Council was contacted for comment.
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