Bankrupt Woking council told job not done despite huge cuts that challenge its ability to deliver services

Woking Borough Council (image Chris Caulfield)
-Credit: (Image: Chris Caulfield)


Despite cutting millions of pounds in services, slashing its workforce, and raising taxes by 10 per cent Woking Borough Council has been warned not to see it as "job done”. The stern words were in a letter from the government appointed commissioners, brought in to oversee the broken council’s turnaround from the historic failures that led it to become the most indebted authority in the country.

The impact of the council's steps to get out of its unprecedented debt, which now stands at £2.1billion, is only beginning to be felt by residents who have already been hit with a 10 per cent tax increase this year - but the pain may not be over soon. In return for their increased bills residents will receive heavily reduced services with cuts of about £8.4m this year, over 15 per cent of the gross services budget, including £2.3m from the staff layoffs and restructures.

Those huge job losses, the commissioners said were “a significant amount to remove in one year and the real test will be in delivery, particularly in the context of reduced organisational capacity". And we’re only at the start with the commissioners warning that it “is important that this is not viewed as ‘job done’", adding "work needs to begin now to set out the strategic framework and planning horizon, and on identifying an appropriate financial envelope to deliver the council’s statutory responsibilities".

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The commissioner's letter outlined the current position of the council and the steps taken since declaring itself bust in 2023. It said Woking’s finances were still “heavily dominated” by the cost of supporting its debt with a net budget of £176.2m - against a published Core Spending Power of just £16.9m.

Of that, £168m is purely to help cover annual minimum debt payments and means a balanced budget, something which councils must legally produce, will not possible “without a significant package of government support”. The debt was accrued during a spending spree between 2016 and 2019 when the local authority borrowed hundreds of millions from the Public Works Loans Board to finance registration projects that are now worth a fraction of what they paid.

Independent investigators, Grant Thornton said poor management, lack of accountability and “potentially unlawful” activity went unchecked for years, allowing the debt to spiral out of control. To balance its budget last time out the council needed “an unprecedented provisional Exceptional Financial Support package” from the Government that included £235.1m to address historic issues including the repayment of £155m of loans made for day to day running expenses and further £95.6m for 2024/25.

Minimum debt repayment charges were suspended, without which the council would have had to find £356.4million in the years up to and including 2023/24, and £105.4million for 2024/25 - to correct years of underpayments.

Extracts of the commissioners' letter read: “The council’s debt stands at over £2.1bn. The value of realisable assets is less than half of this and includes complex assets with a long lead-in time to disposal. This means that the capitalisation direction will not enable a sustainable solution, as there is no means by which the council can repay all the debt from its own resources

“The rental income from the investment estate currently funds £14m of the revenue budget. The council’s companies portfolio consists of 26 entities, 13 of which form the ThamesWey Group and three of which are active companies in the Victoria Square Woking Ltd portfolio.

“The investment estate has been largely built up by acquisition during the past 10 years. The majority of assets acquired since 2016 were bought at the ‘top of the market’ and now present a value for money challenge caused by the impact of overhanging debt on disposal.

“This report illustrates the very significant challenges Woking Borough Council faces in delivering a robust Improvement and Recovery Plan which fully addresses the failings, weaknesses and shortcomings relating to its past performance. The significant historical deficiencies highlighted in the report are fundamental to the way the council has operated in the past.”

Responding, Jim McMahon Minister of State for Local Government wrote: “Historic commercial mismanagement and major governance failures led to Woking Borough Council accumulating an extraordinary level of debt, far exceeding usual levels of borrowing for a council of its size.

“This is an extreme position for a council to be in, and will require unprecedented support from government to resolve. Woking clearly requires a significant programme of change to ensure it is operating to the required standard. “

Responding to the report, Councillor Ann-Marie Barker, leader of the council, said: “We welcome publication of the Commissioners’ third report to Ministers and the accompanying Ministerial response. It is helpful that there is a recognition of the capacity challenges we face in putting the council on a stable footing and, at the same time, working through systematically the plethora of legacy issues which have culminated in the significant debt faced by Woking.

“We remain committed to addressing the historic failings identified in both the Grant Thornton public interest report and the Commissioners’ findings. Through the Improvement and Recovery Plan, we are taking systematic and decisive action to strengthen governance, improve financial management, and rebuild trust with our residents."