Woking’s Financial Situation Is ‘Worse than Bankruptcy’ It’s ‘An Existential Crisis’

Published on: 24 Feb, 2023
Updated on: 24 Feb, 2023

By Emily Coady-Stemp

local democracy reporter

Woking is looking at a financial situation “worse than bankruptcy”, its councillor in charge of finance has warned.

A council tax increase of 3 per cent was agreed by the borough council, which will also rely on £8.3 million of its reserves to balance its budget for the coming year.

The authority was sent a letter by the government in May 2022 outlining concerns about the level of borrowing at Woking, with a follow-up letter calling the council’s debt an “outlier” among councils of a similar size.

See also: Woking Councillor Says, ‘We Face a Mountain of Unsustainable Debt’

The council tax will bring in £11,211,968 for the council, with the average band D property paying £2,248.77 per year from April, having agreed the budget at a meeting on Thursday (February 23).

Cllr Dale Roberts

Cllr Dale Roberts (Lib Dem, St Johns) said being the council’s finance portfolio holder had been a “steep learning curve” and the council was dealing with “an existential crisis”.

He said the administration’s vision was to transform the council so residents saw it not as a “failing bank” but recognised its successful provision of local services.

But he warned that there would need to be “painful decisions” about which non-essential services the council could afford to deliver.

He added that even cutting services may not be enough to stop the council having to issue a section 114 notice, effectively declaring itself bankrupt.

Cllr Roberts told the meeting: “This is not a journey any of us want to go on, yet it is now the only journey available to us.”

He said the level of borrowing advanced to companies without setting aside enough money for repayments had undermined the “sustainability of the council’s revenue budget”.

Revenue is the money a council spends on day-to-day provision of services as well as the costs of running the council such as bills and staff wages.

Of the council’s budget sustainability he said: “That’s not a section 114 issue, it’s worse than that. We cannot solve that alone.”

A team from central government is working alongside Surrey County Council officers and those at Woking, which will lead to them working in partnership on any findings regarding the council’s future budgets, he told the meeting.

Councillors debated at length the past decisions made by the authority, when under Conservative leadership, to borrow for projects in the borough and Cllr Roberts claimed: “The borough borrowed like it had endless credit.”

The Conservatives pointed to cross-party support for the projects, such as borrowing for the town’s Victoria Square project, originally conceived with a budget of £150 million, which then rose to £460 million. The borrowing now stands at £745 million.

Cllr Kevin Davis

Cllr Kevin Davis (Con, Heathlands) said that the “supertanker” of the council’s finances had not started to be turned around when the Lib Dems came into power in May 2022, but before then in late 2020 and early 2021.

He said he had no doubt it would “gather pace and turn quicker” but accused the Lib Dems of “political shenanigans” in putting forward a 3 per cent increase at the borough council when the group had opposed a 2.99 per cent rise at the county council.

Cllr Davis said many of the issues now facing the council had been out of the authority’s control, such as the coronavirus pandemic and rising interest rates.

He added he was pleased the council had built up a “good level” of reserves that may be needed over the coming years.

Cllr Ayesha Azad

Former leader of Woking Borough Council, Cllr Ayesha Azad (Con, Heathlands), stepped down from her role as the finance portfolio holder at Surrey County Council when the government announced a review into the borough council’s finances.

She described the current “serious times” as concerning for residents and staff and said she “had never sought to deny” the level of borrowing the council had undertaken, but had set it out as a “strategy of investment in infrastructure and place-shaping”.

Cllr Azad said: “Do I envy the challenges the administration faces? No I don’t.

“But I would not have raised false expectations that the public work loan board money would somehow be repaid quickly or the amount borrowed reduced when I know that to be false.”

Cllr Ane-Marie Barker

The current council leader, Cllr Ann-Marie Barker (Liberal Democrat, Goldsworth Park) warned that the council’s budget was “not the end of the story”, with the council having announced earlier in the week that the authority faces a financial “black hole” of at least £300 million.

She said the administration was “taking responsibility” for the recovery of the council’s finances, but warned the next steps could be “much worse” than the choices made in the coming year’s budget.

Cllr Barker said: “We are not kicking debt into the long grass by borrowing more to pay off borrowing, we are not holding up our hands and surrendering to the sheer enormity of it, we are not waiting for an economic recovery or a return to the halcyon pre-Covid days.

“We are working with council officers, with external support and with government reviewers to get the supertanker that is the current council finances turned around.”

The council tax increase in Woking is a 3 per cent rise, the maximum allowed by government without a referendum or in exceptional circumstances, as granted to councils such as Thurrock and Croydon which have been given permission to increase council tax by 10 and 15 per cent respectively.

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