Woking Borough Council: Government steps in over £2bn debt

The Victoria Square development is home to shops and retail outlets

Government commissioners have been sent in to a council amid "significant risks" over its £2bn debt following failing investments.

Relative to its size, Woking Borough Council is now said to be the most indebted local authority in the UK.

Its annual interest repayments are now greater than the council tax received.

The council's Lib Dem leader Ann-Marie Barker said the debt was inherited from the previous administration and the authority welcomed the support.

In 2022, the Lib Dems took control of Woking. Previously, the authority was run by the Conservatives as a minority administration. In February, the council had made calls for government help.

'Huge challenges'

A government report, published on Thursday, said: "As a result of past investment decisions, the council has failed its best value duty leaving an unprecedented legacy for the current leadership team, which they have not been able to address."

Documents from the Department of Levelling Up, Housing and Communities (DLHUC) showed that as of December 2022, the council had £1.9bn in borrowing, compared with a core spending power of £14m.

Two companies, ThamesWey Group and Victoria Square Woking Ltd, generated the majority of its debt, through associated housing and regeneration schemes, according to the Local Democracy Reporting Service.

Under those schemes, council bosses borrowed to build skyscrapers in Victoria Place and replace hundreds of homes on the Sheerwater estate.

The town centre has been transformed beyond recognition over past years

Analysis

By Jack Fiehn, BBC Radio Surrey political reporter

Woking town centre has been transformed beyond recognition over past years, with new skyscrapers of over 30 storeys and the Victoria Square development, including shops and retail outlets.

Money was also spent on regenerating the Sheerwater housing estate - one of the most deprived parts of Surrey.

The question being asked is whether a council the size of Woking should have borrowed such huge sums. In other words, did it overreach?

The Conservatives who were running the council until May 2022 said no-one could have predicted the events of the past few years, such as the Covid pandemic and war in Ukraine, which had a serious impact on finances.

The warning is it's only a matter of time before Woking is issued with a Section 114 notice. That means a local authority cannot balance its budget and is effectively bankrupt.

Suzanne Clarke, deputy director of the Local Government Finance Stewardship, wrote to Woking council's chief executive Julie Fisher saying its financial challenges were "acute", adding: "The Secretary of State considers that there is a pressing case for urgent government action."

Skyscrapers more than 30-storeys high have been built

Councillor Barker said: "My administration is very clear about the huge challenges facing the council due to the legacy of both the extraordinarily high and disproportionate levels of debt that we have inherited from the previous administration.

"We are also very clear and focused on the significant risks that the council is now facing up to as a result of that debt.

"We also recognise that these challenges are so significant that the council and its officers cannot deal with these on its own.

"We therefore fully acknowledge and accept the findings of the report and welcome the support."

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