What’s in a loan?

Last week, Wokingham Today’s editorial, headlined “Loan repayment is welcomed”, was referring to the £10,000,000 nine-month loan made on June 8 last year from Wokingham Borough Council to the bankrupt Woking Borough Council.

Let’s hope the repayment of the loan and interest was made on the due date – March 8 – after the paper went to press ( it was – editor).

Wokingham Today now asks us to “applaud the council”, including “Finance czar Imogen ShepherdDubey” for generating £323,000 interest on the loan and for the czar’s insistence that the loan was safe

“as it was essentially backed by the government.”

To insist that the Woking loan was guaranteed by the government is tantamount to a lie.

The so-called finance czar, the Council finance staff, and the Leader of the Council have all been adamant, when questioned, that such a guarantee was enshrined in the Local Government Act 2003.

When pressed, however, they could not provide any evidence in the Act to support a government guarantee of the loan to

Woking.

The loan carried an interest rate of 4.75% and was made on June 8 2023. That’s 274 days of interest to be paid on March 8 2024.

The amount of interest is £345,575.34.

If only £323,000 is received, then where has £33,575.34 disappeared to?

By arranging to borrow from another (un-named local authority) £10,000,000 on June 7 2023 (the day before the loan to Woking) for one year at 4.20% interest, Wokingham’s finance officials decided on the following day to loan the same amount to the bankrupt Woking Borough Council.

Wokingham is due to repay this borrowing on June 5, including interest charges of £420,000 plus charges and fees.

That’s around £100,000 more than the reported interest of £323,000 on the loan to Woking.

Er…… where is that £420,000-plus repayment coming from, please?

There is little point in lending money to other councils (whether they are bankrupt or not) with the same amount of money Wokingham has borrowed the day before.

The Voice of the Borough was keen to know how Wokingham Borough Council was going to spend what it described as “this particular windfall”, said to be £323,000, conveniently forgetting the higher cost of the borrowing Wokingham incurred to enable it to make a loan to Woking.

We now know; the so-called windfall will go towards the

£420,000 plus charges and fees which is what Wokingham (and its council taxpayers) now has to pay on June 5 2024, in effect, for bailing out bankrupt Woking.

It won’t go to Wokingham’s vital social services as the Council Finance czar indicated at last November’s Full Council meeting.

So that’s no windfall; it is a straight and unaffordable loss for Wokingham’s council taxpayers.

And a totally avoidable loss, too.

Philip Meadowcroft, Wargrave