Woking has followed Slough Borough Council into effective bankruptcy after revelations of its £1.9 billion debts, a figure likely to rise to £2.4bn.
And now Thames Tap partner Evans Jones has argued for better partnerships with the private sector to prevent further crises within local authorities.
A section 114 notice was issued by Woking Borough Council’s section 151 officer and interim director after a review by Department of Levelling Up, Housing and Communities (DLHUC) reported that the issues were down to its failed investment strategy that led to unaffordable borrowing, inadequate steps to repay it and high values of irrecoverable loans. The council’s likely deficit for 2023/24 of £1.2bn means it is unable to balance its budget for this and subsequent years.
The review named mixed-use high-rise Victoria Square in the town centre (pictured) and Sheerwater, a regeneration project of almost 1,000 homes, which caused most of the debt.
The section 114 notice stops all but essential spending. Much of the debts had been run up while under Conservative control but LibDems took control in 2022.
Council chief executive Julie Fisher said: “The issuing of a section 114 notice is a very serious matter that rightly reflects the scale and breadth of the acute financial situation facing the council.
“Through the commissioning of an independent financial review of the council’s borrowing and loans to its companies, we have a comprehensive understanding of our severe financial position which informed the section 151 officer’s decision to issue a section 114 notice.
“The council is required to meet within 21 days to consider the notice. I am preparing a response to this notice for an extraordinary meeting of full council that is being arranged for Tuesday 20 June to meet this requirement.
“Following the Secretary of State’s appointment of a commissioning team, I will be seeking their expertise and using their critical insight to help the council deliver an improvement and recovery plan at pace to ensure we take actions that are in the interests of the public purse.
“My first report on these actions will be to the Thursday 13 July meeting of the council’s executive.”
Council leader Cllr Ann-Marie Barker said: “My administration has been very clear about the huge financial challenges facing the council due to the legacy of inherited debt.
“The notice makes clear the true scale of these challenges which are so significant that the council cannot simply deal with them on its own.
“We must work in partnership with the whole of Government and its agencies to support us in delivering a robust improvement and recovery plan.
“I understand the concerns and questions this will raise, and I am committed to maintaining transparency with residents and partners as we progress through this unsettling time.
“Difficult decisions will lie ahead as we seek to balance the council’s budget and address the unaffordable debt.”
In a statement by the TaxPayers’ Alliance, investigations campaign manager Elliot Keck said: “Woking residents have been badly let down by town hall bosses.
“Thanks to this botched spending spree, local households will likely face years of punishing council tax increases and cuts to services to help balance the books.
“Councils should focus on delivering key services, not taking chances with taxpayers’ cash on high-risk property development.”
David Jones, managing director of Thames Tap partner Evans Jones, said: “In a shocking turn of events, Woking Borough Council has effectively declared bankruptcy, sending shockwaves through the local community.
“The council, responsible for providing essential services and managing the affairs of the borough, has been struggling with financial difficulties for some time now. Despite efforts to cut costs and generate additional revenue, the mounting debts have proven insurmountable.
“Woking’s challenges can be traced back to a flawed investment strategy. It is regrettably all too common for local authorities, driven by good intentions, to make suboptimal investment decisions or struggle with effective regulation and implementation of development and investment strategies.
“Personally, I strongly support the concept of public funding as a means to stimulate inward investment and development. Well-targeted public investment can often yield positive outcomes. However, local authorities face difficulties in matching the agility and ruthlessness of the private sector, leading to frequent instances of failed or underperforming investments.
“The concern lies in local authorities becoming risk-averse, which hampers the much-needed ‘pump priming’ of projects. Striking the right balance is challenging.
“While it is essential to allow room for local authorities to experience failure, there is a pressing need to cultivate better partnerships between the public and private sectors, supported by expert commercial advice”.
Image: Google.
© Thames Tap (powered by ukpropertyforums.com).
Sign up to receive our weekly free journal, The Forum here.
