Daily Mail

Lib Dem council close to collapse with record debt of £2.4BILLION

...that’s 100 times its annual income

- By Kumail Jaffer Political Reporter

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.’

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