Conservatives Claim Council ‘Bankruptcy’ is Likely as Party Finger-pointing Kicks Off

Published on: 16 Jul, 2023
Updated on: 17 Jul, 2023

By Martin Giles

Any prospect of a cross-party approach to the financial challenges at Guildford Borough Council seems to lie in tatters after press releases issued by the Liberal Democrats and Conservatives.

The leader of the third biggest group at Millmead, the Residents for Guildford and Villages Party (R4GV), says he finds the ‘tit for tat’ statements “thoroughly depressing”.

In a GBC press briefing given to The Dragon on Wednesday (July 12), it was said that political group leaders were generally supportive of the council’s new financial measures but a GBC update report and claims in a subsequent Lib Dem statement, blaming the situation on the Conservative government, have provoked an angry Conservative response.

Council & Lib Dem group leader Julia McShane

Acknowledging that “rising interest rates and a number of accounting issues” were the most immediate causes of the financial problems at GBC the Lib Dems issued a press release which said: “There are a number of issues which have led to the situation Guildford Borough Council finds itself in:

• Previous Conservative administrations committing the council to high levels of borrowing in order to fund a bloated portfolio of major projects
• The Liz Truss/Kwasi Kwarteng Conservative budget last year which kicked off rapid rises in interest rates which have massively increased the council’s borrowing costs
• The failure of the national audit system for council finances which, since being privatised by the Conservatives, has resulted in councils up and down the country waiting years for their accounts to be audited
• A decade of local government funding cuts under the Conservatives which have forced councils to eat into their reserves and have led to chronic understaffing of finance teams.”

Opposition & Conservative group leader Philip Brooker

But labelling the GBC General Fund Budget Update report “disgraceful” Guildford Conservatives say it “sets out the truly appalling state of the council’s finances, highlighting that the council is likely to need to issue a Section 114(3) notice by next year.”

A section 114 notice would effectively declare the council to be bankrupt, although as a government body it cannot go into liquidation or administration. But it can, as has happened at Woking, have central government appointees brought in to manage financial affairs.

See: Guildford Officers Find £10m Accounting Error

The Conservative statement continued to say that newly elected and outgoing Conservative councillors, are “shocked” because “the Lib Dem/R4GV coalition hid the true state of the council’s finances” from Conservatives and the public.

‘There is no single party responsible’

Responding to the statements R4GV leader Joss Bigmore said: “I find the ‘tit for tat’ press releases thoroughly depressing. They are at best ignorant and at worst deliberately misleading.

R4GV group leader Joss Bigmore

“There is no single party, or administration responsible for the financial difficulties Guildford finds itself in. Similarly, although I am sure everyone would like an individual to blame, there is not a single officer or councillor that could be held culpable.

“There are a number of factors contributing over close to twenty years that have resulted in the position we are in today, both local and national, and most recently international issues like the pandemic and the Ukraine War.

“However, Guildford currently has £300 million of debt against an asset base of over £1 billion. We are solvent and a far better position than most councils. The yield on our assets easily covers the debt repayments against them.

“The issue we face is servicing the debt associated to Weyside Urban Village and Ash Road Bridge over the coming years, both projects supported almost unanimously across multiple administrations Rising interest rates have made this harder, but not impossible if everyone works together to find a solution.

“Woking is a reminder of what will happen if we don’t: 350 council officers at risk of redundancy, and government commissioners taking all decision-making away from locally elected councillors.

See: 350 Woking Council Jobs On Notice

“This is very avoidable if we avoid senseless politicking and focus on the solution before trying to apportion blame.  My fear is that the Lib Dems and the Tories will behave increasingly like rabid animals as we approach the general election and the cost will be a section 114 notice.

But the Conservatives say the Lib Dem council “is seeking to blame the Conservative government and the previous Conservative council administration for their predicament, instead of admitting their own financial mismanagement.

“It is true that the previous Conservative leadership had proposed some ambitious infrastructure projects, such as Weyside Urban Village, but no financial commitments had been signed off when the Conservatives lost control in 2019.

“All financial commitments were signed off by the Lib Dem/R4GV coalition, along with the council budgets for the last four years.”

Former Conservative leader Paul Spooner

Former Conservative council and group leader Paul Spooner said: “This is a disgraceful report that is focused on ignoring the past four years and passing the buck to previous Conservative administrations.

“We can now see why the former leadership has been silent on rumours over recent months. Keeping it a secret between Lib Dems and R4GV is an absolute disgrace.”

The Liberal Democrats say they will be “open and transparent about the scale of any challenge Guildford is facing and the difficult decisions needed to get the finances in order.

“Our highest priority will be to protect public services, especially for those most in need, and sound finances are the essential foundation of good public services. Our plan to restore sound finances is as follows:

• Immediately institute spending controls to carefully limit all new spending.
• Review our major projects and planned borrowing, including how our borrowing is structured
• Explore the possible sale of council assets to reduce the need to borrow
• Expanding and strengthening the council’s finances team
• Continue with our plan to reduce costs by combining operations with Waverley Borough Council.

See also: GBC to Set ‘Strict Controls’ on New Spending to Tackle ‘Extremely Concerning’ Finances

“Above all, we will not shy away from making the tough decisions to make sure residents are protected from cuts to core services. Our residents will always be our highest priority, and we will be honest and realistic about the choices that need to be made to keep the Council financially stable.”

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