Woking’s biggest redevelopment schemes have led to the borough council being put into special measures after racking up £1.9 billion in debt – a figure likely to spiral further.
The Department of Levelling Up, Housing and Communites (DLHUC) has sent in commissioners after an external review, launched in January, reported the scale of the crisis.
It named mixed-use high-rise Victoria Square in the town centre (pictured) and Sheerwater, a regeneration project involving almost 1,000 homes, as the two largest commercial schemes in the council’s portfolio.
It stated: “These two schemes alone have accounted for the majority of the current £1.9bn debt level. As a result of the complexities of the loan facilities this debt level is predicted to rise to £2.4bn within the next two years.
“Added to this is the complex arrangements by which the council has decided to deliver and manage these major projects, placing 100 per cent of risk with the council and this is a key factor contributing to the council’s current precarious financial position.”
The council, which was under Conservative control for 14 years until LibDems took over in 2022, embarked on an ambitious regeneration programme from 2016 – 2019.
It borrowed money from the Public Works Loan Board which offered authorities loans at lower than commercial interest rates and projects were taken on through a joint venture with the council’s wholly-owned ThamesWay group of companies.
The report says the council is effectively self-funding the borrowing costs through additional borrowing.
The authority now has six months to draw up a recovery plan. However, a firesale, like that which Slough has been made to hold, was deemed inappropriate by the DLHUC.
In the case of Victoria Square, the council has debts of £700m while the site has been estimated to be worth between £300m and £350m.
The report concluded that the council had invested heavily in the two schemes with the intention to raise the profile of Woking, but added: “What has not been built into the business case for such major investments is consideration of the expertise and capacity of a small borough council to manage projects through to final maturity or exit.”
In a statement responding to the report, council leader Cllr Ann-Marie Barker said: “I am committed to openness and transparency and will continue to keep residents up to date on progress as we deal with the council’s finances.
“I welcome the letter I have received today from the Minister and the recommendations being proposed by the team that undertook this review.
“I am pleased that there is acknowledgement of the strong collaboration between officers of the council and the review team on the progress that has been made to address the council’s financial resilience.
“My administration is very clear about the huge challenges facing the council due to the legacy of both the extraordinarily high and disproportionate levels of debt that we have inherited from the previous administration. We are also very clear and focused on the significant risks that the council is now facing up to as a result of that debt.
“We also recognise that these challenges are so significant that the council and its officers cannot deal with these on its own. We therefore fully acknowledge and accept the findings of the report and welcome the support set out by the Minister in his letter.
“I know that councillors and officers will work at pace alongside the government-appointed commissioners to address the issues identified in the report and achieve best value for the public purse through the preparation and delivery of an action plan.
“When my administration gained control of the council last May, I pledged to take on the challenge of major change and embed affordable, responsible and sustainable principles into how the council conducts its future business and this remains my priority.
“As part of this pledge, we have taken steps to control borrowing, made changes to the governance of our commercial investments and I have instigated independent reviews of all the council’s borrowing and investments.
“I recognise we need to deliver our plans for recovery of the council’s finances with greater pace and urgency and we face difficult decisions in the months ahead. I will work with my officers to ensure, with the support of the commissioning team, we have the capacity and experience to deliver the improvements needed.
“I remain committed to keeping residents, businesses, and community partners fully informed as we progress through this process and develop the detailed plans for recovery with support and oversight from the commissioning team.”
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