Bankrupt council warned years ago about debts

Victoria Square in Woking
Image caption,

Woking Council borrowed to develop Victoria Square

At a glance

  • Woking Borough Council was warned four years ago about its debt levels

  • Debts of £2.6bn have forced the council to effectively declare itself bankrupt

  • One of the group who carried out a peer review in 2019 said: "I remember asking key figures at the council how they slept at night with debts at these levels”

  • Published

A council that has effectively declared itself bankrupt was warned about its debt levels four years ago, it has emerged.

Woking Borough Council was alerted by a Local Government Association (LGA) independent peer review that its debt - which was half as much as it is now - could tip it over the edge unless steps were taken.

Last week, the Surrey local authority had to halt all new spending after amassing debts rising to £2.6bn and a deficit of more than £1bn.

Paul James, who was one of the review team, has now tweeted: "I'm sorry to read about this but far from surprised."

The borough council had to issue a Section 114 notice declaring it could no longer maintain a legally balanced budget and all new spending must stop.

It also meant spending on all non-statutory services would end too, leaving only minimal levels of services it must provide by law.

Four years ago, the LGA review said the level of borrowing at the local authority was “atypical amongst district councils”.

Mr James wrote on Twitter, external: "I was part of a Peer Challenge Team in 2019 which raised concerns about the level of debt and lack of transparency of deals.

"That was when the debt was at half the level it is now."

He said: "Investing in the local economy and enabling regeneration is a good thing, when it is proportionate and affordable, but this is off the scale.

“I remember asking key figures at the council how they slept at night with debts at these levels.”

Mr James and other members of the peer team have been contacted, but all have declined to comment.

Woking Borough Council declined to comment on the warnings, adding: “An extraordinary meeting of full council will be held on 20 June where councillors will discuss the notice and our proposals to meet the financial challenges ahead.

“To comment before these papers are published would be inappropriate.”

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