After nearly two years of silence, Croydon Council’s former leader and finance chief have hit back at a leaked report calling it a “politically motivated witch-hunt”.

The long-awaited Penn Report has been leaked on local website Inside Croydon and the Municipal Journal.

The report, which was completed 18 months ago, but until this week remained unpublished, is written by Local Government Association’s Richard Penn.

Mr Penn carried out an investigation into the financial mismanagement of the council before it was forced to issue a Section 114 notice, declaring effective bankruptcy in 2020.

Following the completion of the report, former leader Tony Newman, and former cabinet member for finance, Simon Hall resigned as councillors in March 2021.

Now, Mr Newman claims there was “no evidence of wrongdoing” by him or Mr Hall and said financial decisions were “made in good faith”.

He said: “The real losers in all of this are the people of Croydon. Instead of getting answers to their questions, they have shadowy players trying to manipulate their perceptions and scapegoat former councillors who have limited means to defend themselves.

“We acted at all times with integrity and honesty. Simon and I very much regret the council’s financial crisis, but things can go wrong without there being any wrongdoing.

"If we had known a pandemic was coming, of course, we would have looked for additional ways to protect Croydon’s finances.

"But to suggest that anybody at the council breached the Nolan Principles is false and defamatory.”

While Mr Hall claimed the report was “subjective” as it used anonymised interviews.

He said: “Everyone who served as a councillor, myself included, truly regrets Croydon’s financial crisis, and the constraints it continues to put on public services and families in the borough.

"But it would be wrong to attribute Croydon’s problems just to spending decisions.

"This is also about longer-term funding shortfalls from central government, which we were powerless to influence.

“For the avoidance of doubt, Croydon was forced to issue a Section 114 notice because of a single ‘black swan’ event – namely the Covid shutdown, which choked the council of revenue while adding enormously to its costs.

"It was a perfect storm, and we were unable to weather it because of years of underfunding and austerity, which left us with very limited financial room for manoeuvre."

He claimed that pressure from “austerity-driven cuts” is “enormous” and said there is additional strain on the council’s budget as it cares for lots of  Unaccompanied Asylum Seeking Children.

Mr Hall added: “We spent many years wrestling with these challenges, often successfully and always in good faith.

"But those challenges will persist, even as Croydon recovers from the pandemic.

"The same challenges will continue to beset our borough if politicians are not honest or sensible enough to address them.”

An excerpt of the report, published by the Municipal Journal said: “Major risks within the council’s revenue budgets and in its investment portfolio appear to have been downplayed in the face of what seemed to have been unbridled optimism and seemingly an almost reckless disregard of the potential adverse consequences of these risks.

“By narrowing its focus and attention to a small number of commercial, regeneration and other goals the council appears to have effectively blinkered itself to its wider responsibilities.”

Despite the report being leaked, Croydon’s executive mayor, Jason Perry, who was elected in May, said he was “still committed” to officially publishing it.

He said: “I am still committed to publishing it but we must go through due legal process. I am mindful that we protect the council tax payers pocket.

"The commitment has always been there and remains.”