RESIDENTS of Woking borough should prepare themselves for “some hard political decisions” in the months ahead.

That view is expressed in the Levelling Up, Housing and Communities’ (DLUHC) report into the council’s finances, investments and related governance presented last week. The review has led to the council being placed in special measures by the government.

The minister for local government, Lee Rowley, said the council faced “the most challenging financial position of any local authority in England”, prompting the nomination of the three individuals who carried out the review to work with the council to address the financial challenges.

The review considered a grim financial position: Woking Borough Council is the most indebted local authority relative to its size in the UK, with borrowing of £1.9bn compared to a net budget of £24m, the debt translating to £19,000 per head of the borough’s population; debt forecast to hit £2.4bn within the next two years; £62million a year to service the debt. The council is also likely to require an estimated additional £250-£300m of borrowing this financial year, much of it the refinancing of about £200 million of loans and to avoid a forced sale of assets.

Throughout, the review notes the council’s failure to manage its investments with sufficient skill and resources.

“The two largest commercial schemes in the council’s portfolio are the regeneration of Victoria Place in the town centre and the regeneration of Sheerwater housing stock,” says the report. “Financing these schemes account for the majority of the council’s debt. 

“What is clear is that the investments by the previous leadership were made with little provision or consideration of the council capacity and capability to manage these programmes effectively and efficiently.

“The council had the corporate capacity of a small district council, yet the investment portfolio of a very large city or metropolitan council.”

The reports adds: “From our discussions and interviews a picture emerges of strong senior level ambition to drive through the redevelopment of the town centre and the regeneration of Sheerwater.

“Some of the officers who were at the council at the time these decisions were made commented on the lack of involvement or transparency of what was being decided.”

It also identifies a “very unusual” situation. “The council constitution determined that the previous chief executive [Ray Morgan]  could hold an Opportunity Acquisition Fund, which gave him delegated responsibility to spend up to £3m on regeneration projects without formal recourse to the executive or council. This delegation is very unusual and has now been removed.”

That delegated authority was “used to make a number of purchases, largely between 2016 and 2019. These sites include 10 Acre Farm (£1.5m), Robin Hood pub (£1.4m), Anchor pub (0.9m)”. 

The report also referred to council loans to external organisations, including “£6.4m to Greenfield School”.

Expanding on the difficult decisions ahead, the report states: “Senior officers and the workforce in Woking have not experienced the council working within tight financial constraints. 

“The budget situation in Woking will now require a significant change programme, which is due to be rolled out. It is imperative that everybody commits to the savings targets and delivers them in what will be a very short period.

“This is to give the council a fighting chance to remain solvent in the coming years.

“There will be hard political decisions to make in the coming months.”

Cllr Ann-Marie Barker, the Liberal Democrat leader of the council, said: “My administration is very clear about the huge challenges facing the council. We also recognise that these challenges are so significant that the council and its officers cannot deal with these on its own. We welcome the support set out by the minister.”

Cllr Kevin Davis, leader of the Conservative Group, said: “We have consistently made the point that it was the lack of commercial income that led to the financial difficulties of the council. The amount borrowed and the rate of interest were fixed, however, The levels of commercial income have not been. The pandemic, the war in Europe and the inflation issues that followed led to a change in lifestyles that we still see today.

“The reasons for Woking council being in the financial situation it is are multiple, but it is that key reason or conclusion, which is why the original financial model has been shown to be inadequate.”

Woking MP Jonathan Lord added: “Blame-gaming will not deliver for residents, but it is surely appropriate in these circumstances that those councillors who voted in a way that got us into these financial difficulties should take responsibility. I call on both the Conservative Councillor Group and Liberal Democrat Councillor Group to apologise. 

“Most importantly, it is now vital that all councillors, from all parties, should now work constructively together to get Woking’s finances back on track.”