Independent review into how Woking council went bust delayed as more details emerge

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

The publication of the independent review into how Woking Borough Council collapsed into effective bankruptcy, leading to residents losing vital services and paying inflation-busting taxes, was delayed due to the Government calling the general election. According to forensic accountants Grant Thornton work will restart on July 8 when it begins further “consultation” into the draft report.

The Local Democracy Reporting Service understands this to mean extracts will been sent to those named in the report for fact checking purposes. The individuals will only receive sections where they are named - to maintain the draft's wider confidentiality until publication. Those named are expected to be given four weeks to respond.

A Woking Borough Council spokesperson said: “The auditor conducting the independent Value for Money review, Grant Thornton UK LLP, has confirmed a delay in publication due to the general election. The review considers our previous governance arrangements and processes for making effective investment decisions, how risks were assessed and managed, and how these decisions were scrutinised. The final report will be published when it is received by the council and the timing is dependent on Grant Thornton completing the process they are required to follow.”

READ MORE: Every Surrey General Election candidates candidate standing in 2024

READ MORE: The surprising Surrey postcodes which are cheapest to buy a home in latest data

The new deadline was raised during the last meeting of the council’s audit and governance committee when members from Grant Thornton were presenting an update to its review into the council’s finances. They described Woking Borough Council ’s financial situation, following investment decisions taken between 2016 and 2019 under the previous administration, as “extremely serious”.

The update said the council had an “unprecedented financial shortfall” with a “forecast negative value of the general fund at 31 March 2024 estimated to be £1.4 billion - that can not be funded from resources available to the council”.

It read: “This deficit has been driven largely by the revaluation of some of the assets against which money was borrowed by the council and the miscalculation of the council’s necessary minimum revenue provision. The number and value of unsecured or under secured loans to third parties and purchases of land and other property without independent valuations have also contributed to the council's extraordinary level of debt estimated at £2.1billion”

Addressing the meeting, one auditor said there was a risk of fraud “given the financial challenges they have had. "There was a risk that management would overstate income and understate expenditure in the financial statement. We also have the valuation of land and buildings investment properties and councils dwellings. These are the large values on the balance sheets. These are complicated estimates."

The problem was made all the more challenging to unpick because the council advanced significant loans to companies it owned. Some of these, the meeting heard, are posting losses and are unlikely to repay the loans.

An auditor said that the council had not prepared group accounts (for the companies it owns) for a number of years and that the structure was very complex - to the extent that they still needed to establish “what the group structure is” before those firms can be audited.

Another auditor said: "We are obviously doing a deeper dive into the investments, the history piece, that is in the drafting stage. We will need to do some additional Value For Money considerations that didn't fall into that scope, particularly around anything around the governance side of wider council business and financial sustainability.

Adding: "Due to the election, and that announcement, we have held off on our consultation on our draft report. We plan to do that after the election at the moment, we are planning to do that on Monday, July 8 and we have a four week consultation period.

"At that point it is still very much a draft were we take on board those consultation comments and hope to finalise that later but our timetable has been pushed back with the election announcement."

You can sign up to get the latest news about Woking's financial crisis from SurreyLive straight to your inbox for free here.