New powers aimed at cutting the excessive risky borrowing that left taxpayers footing billion pound bills has been welcomed by Woking Borough Council.

Woking famously went bust with debts of more than £2billion on the back of its failed investment plans.

Its disastrous regeneration strategy to transform the town centre and areas such as Sheerwater between 2016 and 2019, collapsed the council’s finances. It forced massive cuts to jobs and services and hit residents with inflation busting rate hikes.

The shockwaves were also felt politically with senior officers leaving, and residents voting out the once dominant Conservative administration.

Now, the Government is looking to switch on powers to track council investment and debt to spot early warnings before it becomes a full-blown crisis.

It is hoped it will stop a repeat of the situation that has already seen the government spend £500m in bailouts for Woking, with more potentially coming once the results of the council’s asset sell offs are better known.

How these new powers will work, and what other measures could be used, are to be considered in a consultation that will run until August 6.

Councillor Dale Roberts, deputy leader of Woking Borough Council and portfolio holder for finance, said: “We welcome the government’s consultation and the proposed introduction of stronger safeguards around council borrowing and investments.

“The position Woking faces today highlights the risks associated with the scale of borrowing taken on by the previous administration to fund an overambitious programme of regeneration and property investments.

He added: “Councils and investment companies are fundamentally different organisations, and it is important that governance and oversight reflect those differences.

“Stronger oversight and earlier identification of risk will be key to preventing similar situations arising elsewhere in the future.

“These proposed measures provide an opportunity to ensure robust checks are in place across the sector, so that borrowing remains proportionate, affordable and focused on delivering sustainable outcomes for communities.

“Once we have fully considered the proposals, we will provide a comprehensive response to government and will seek an approach that supports local financial control while maintaining clear and effective oversight.”

Woking Borough Council’s debt was nearly 100 times its annual budget – a figure which still sounds jaw-dropping. The debt will be taken on by the newly formed West Surrey Council.

Other at-risk councils included Thurrock that racked up £1.5 billion in debt through borrowing to finance failed investments – both have curbed excessive borrowing since, the Ministry of Housing, Communities and Local Government said.

It is hoped the new measures will strengthen oversight and transparency, and ensure borrowing across local government is affordable and sustainable.

Local government minister Alison McGovern said: “In Woking, Thurrock, and other councils we’ve seen poor investment decisions leaving taxpayers footing a big bill.

“We can’t afford to wait until a council is on the brink of collapse to act. That’s why we want to bring in new powers so we can identify the risks and act before it’s too late.”