Lib Dem council close to collapse with record debt of £2.4BILLION
...that’s 100 times its annual income
WOKING council was on the verge of the biggest ever local authority collapse last night after years of speculative investments racked up debts of a projected £2.4billion by 2026 – 100 times its annual budget.
Ministers have appointed external commissioners to take control after the council became the ‘ most indebted’ in England relative to its financial size.
The Surrey authority, run by the Liberal Democrats since May 2022 after years of being ruled as a minority administration by the Tories, started investing in commercial properties in 2016.
It now has debts of £1.9billion – forecast to increase to £2.4billion by 2024/25 – despite having a budget of just £24million and a spending power of £14million.
In March, Croydon council was put in special measures after declaring bankruptcy for the third time in two years and signing off a record 15 per cent council tax rise. The move allows central government to write off millions in loans at the Tory-led authority, which accrued a ‘toxic’ £1.6billion of debt under the previous Labour administration.
Local government minister Lee Rowley said: ‘Woking Borough Council recognises that this debt, and the reliance on commercial income to fund services, places it in an extremely challenging financial position.’
The council now risks effective insolvency after a spike in debt interest costs. Woking has previously invested in a shopping centre and a Hilton hotel.
Two firms, ThamesWey Group and Victoria Square Woking Ltd, generated the bulk of its debt through housing and regeneration schemes. In January, officials commissioned a review into the council’s governance, and a month later Woking said it was at risk of insolvency. The review said the council ‘will never have the capacity to effectively manage all the commercial and economic considerations’. Levelling Up Secretary Michael Gove, who has appointed three experts to oversee the council, said ‘there is a pressing case for urgent government action to protect the interests of the residents and taxpayers of Woking’. Leader Ann-Marie Barker said she is ‘very clear’ about the challenges facing the council due to the ‘disproportionate levels of debt we have inherited from the previous administration’. She said: ‘The council and its officers cannot deal with these on its own.’