Woking’s ‘Crushing’ Roadmap for Cuts – Council Tax Might Be Raised Above 3%

Published on: 18 Jul, 2023
Updated on: 21 Jul, 2023

By Chris Caulfield

local democracy reporter

In what is becoming a familiar theme of council austerity in Surrey, the roadmap for Woking Borough Council’s financial recovery – including potential price hikes and council tax rises – has been agreed.

It was laid out over the course of a week, first at the overview and scrutiny committee on Monday, July 10, when the council’s interim head of finance Brendan Arnold painted the bleak future facing the authority, and then at the council’s Executive Committee three days later.

Mr Arnold, appointed in March to help navigate the council through its mess, fielded questions for much of the four-hour scrutiny meeting as he explained the framework to “achieve a series of balanced budgets” in support of the council’s improvement and recovery plan.

The swinging cuts and budgeted inflation-busting increases to revenue, will allow it to achieve successive balanced budgets through what it is calling a set of “Guiding Principles”, the council hopes.

One is to “maximise receipts from all funding streams including council tax and income” but even increasing council tax by its maximum 3 per cent each year would in real terms, be a net reduction in income.

Higher council tax?

It is unknown “whether government will permit a higher council tax for Woking as has been agreed in other councils suffering financial [challenges]”, but questions are being asked.

They are needed because the council’s failed investment strategy saw its debts skyrocket to £2.6 billion and a deficit of £1.2 billion.

It was made all the worse, Mr Arnold told scrutiny because the council failed to act prudently and set aside enough money each year to pay off its loans.

He said: “Minimum Revenue Provision (MRP) rules were brought in by government to enforce a means where councils would set aside specific amounts of money to enable that debt to be repaid.

“It was mandatory. But this was changed to allow councils to set their own, as long as it was on a “prudent’ basis.

“During the years we are discussing the MRP set aside in Woking was about 0.2 per cent and the Surrey average was nearer 2 per cent.

“In other words the council was under providing that compared with its regional peers to a very marked degree effectively – using a percentage level one-tenth of the average in the county.

“Which I think is a good indication of why it finds itself in the position.

Cllr Dale Roberts (Lib Dem, St Johns), portfolio holder for economic development and finance, described the medium-term financial plan as the “next step” on the council’s recovery as he presented it to the Executive on Thursday, July 13.

He said the plan deals with both budget shortfall and longer-term moves on the overall debt.

There will also be a revised budget brought forward in September to bring forward savings as quickly as possible with a “wider suite of savings” on top of those already cut presented in February.

Residents will be consulted on spending cuts worth up to £8.7 million a year with a further £4 million decided on a working level. The council said it was looking to trim £11 million from its budget and expects some of the potential cuts to not make it through the consultation process – hence the £12 million in mooted cuts.

Already in just one week, more than 1,000 people have taken part in the consultation process, more than double the total borough leader, Cllr Ann-Marie Barker predicted would take part.

As part of this, as the LDRS reported, comes the 350 people placed under consultation for redundancy with 60 full time equivalent jobs to be lost.

Cllr Liam Lyons

Cllr Liam Lyons (Lib Dem, Mount Hermon) said: “Looking at the wider impacts across the borough, it’s going to be crushing in terms of the fees we need to raise and the services we need to cut, but this is the least worst option if we have any chance of balancing this budget.

The council will continue to hold monthly extraordinary meetings of the overview and scrutiny committee, with June’s section 114 notice, which effectively declared the council bankrupt, acting as “a sort of menu”.

It will be used to “refine the numbers and make sure that they have been fully explored as we, in the near future, expect to engage with government to explore the prospects of a level of financial support”, Mr Arnold told the overview and scrutiny committee.

He said: “It becomes a roadmap for the financial recovery plan being built, which is led by commissioners and reported to full council at the August meeting.

“It doesn’t stop being important simply because the debate has happened.

Mr Arnold added: “Where we are now with this document is quite a lot of financial work is being undertaken to establish whether that £1.2 billion deficit will increase or whether it will reduce.

The council, he said, was “engaging with technical advisers and specialists” to determine how much past accounting statements needed to be adjusted and to establish appropriate accounting policies and standards.

Mr Arnold said it was still too early to make any statements about the likelihood of a government bailout and that the section 114 notice would cast “a long shadow” over the “challenges that now face the council”.

He said: “What I can say is that officials in DLUHC have been at all times courteous, helpful and understanding of the council’s position” and that the council could “look forward with a level of confidence that we will be able to have good conversations, but as to the content of those, and their likelihood of success, I think that will have to wait until we’ve had some of the conversations.

Cllr Josh Brown

Asked by committee chairperson Cllr Josh Brown (Con, Byfleet and West Byfleet) whether he felt the council’s former financial officer “missed things”, Mr Arnold said his predecessor was “very committed to the council and extremely diligent”.

He added:”Was the information lying in plain sight and noticed?

“No, I don’t believe it was. It required several weeks of close analysis to pull out the information.

“You might say, ‘ah if other people had done the analysis that you had earlier, would the deficit or a version of it had been found’ and the answer to that is ‘yes’, but of course, there was a philosopher at some point, it might have been Voltaire or Descartes, who said ‘the pointlessness of speculating on what might have been’.

“It wasn’t looked for and therefore it wasn’t found.”

Mr Arnold added: “If you are looking at a situation where a very large portfolio was not appropriately dealt with in terms of the formation of MRP charges, when those assets were extremely large in relation to the core funding that the council had.

“I think you have to conclude that the judgements made were not prudent – and they were required to be prudent.

“So at that level, my judgement is that the council was not using an appropriate approach and did not exercise its judgement correctly.

“However the value for money review being conducted by Grant Thornton will bear on these and other contingent matters in some depth and that should be the place we look to for a final set of views.”

The 14 guiding principles Woking Borough Council will adopt

1 Fees and charges reviewed annually and adjusted for inflation, comparability, and competitiveness.

2 Vulnerable groups will be considered carefully.

3 Service level spend will be benchmarked regularly with a suitable peer group and proposals to align with the benchmark will be brought forward.

4 Digital First service delivery but mindful of the risks of exclusion.

5 A rolling programme of service reviews to ensure operating models, organisational design and cost footprints are adjusted across the council.

6 Service developments, savings and investment will be brought forward and all business cases demonstrate feasibility, deliverability, and appropriate financial pay back.

7 The council will consult with residents and other stakeholders in the borough on budget proposals.

8 Business cases will include rigorous application of investment appraisal techniques, peer review and scrutiny function before being adopted.

9 The council will welcome approaches from regional and other partners for joint working and joint management initiatives.

10 Rebalance the general fund through its own endeavours, property rationalisation, and Government support. Reach for unearmarked reserves of 5 per cent net expenditure – £0.8 mi based on current core funding of £16m.

11 Maximise receipts from all funding streams including council tax and income.

12 Service budget growth funded from grants or other contributions, commercial income or fees and charges, or revenue savings. No other growth will be adopted.

13 Improve risk assessment at both strategic and operational levels to inform budget process.

14 Make value-for-money decisions and obtain best value for the ‘public purse’ generally.