‘Woking doesn’t have skills to resolve deep rooted financial problems’

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Woking Borough Council does not have the commercial skills or capacity to resolve its deep rooted financial problems, an independent report to the Government has concluded. Titled Governance, Financial and Commercial Review of Woking Borough Council, the 47-page document gives a blow-by-blow account of the council’s financial mess and exposes the “reality that the council currently has double the level of borrowing per head of population compared to the next highest council”.

Investigators conducted the report in January and February this year with secondary work carried out in April and May, and was sent to the Department for Levelling Up Housing and Communities (DLUHC). It was published just days before Woking Borough Council declared itself effectively bankrupt when issuing its Section 114 notice with debts expected to hit £2.6billion and a deficit of more than £1bn.




Much of the council’s debt was accrued on the back of complicated development deals where it borrowed hundreds of millions of pounds to pay companies it owned for town centre regeneration projects, with the companies essentially repaying the council with that same money. The report noted that council had been “effectively self-funding the borrowing costs through additional borrowing”.

READ MORE: Woking Borough Council officially bust as whopping £2billion debt sparks bankruptcy

Debt servicing as proportion of spending power – Woking compared with councils nationally (Image: National Audit Office)(Image: Debt servicing as proportion of spending power – Woking compared with councils nationally (Image: National Audit Office))

‘Extremely high debt profile’

The report read: “This has created an extremely high debt profile which is not backed by assets in any way matching that debt. Some companies are making operational losses but still extending their borrowing to cover principal and interest repayment costs.”

The second period of investigation, its authors said, had to be carried out after “the presentation of fresh evidence and updated reporting of the council’s finances, the seriousness of which raised concerns for both the panel and DLUHC”. Some of the report remains redacted due to “commercial sensitivity”.

It found that “the sheer scale and complexity of the investment and commercial activity” means the council “will never have the capacity to effectively manage all the commercial and economic considerations”. It added that there was “insufficient regard to the level of risk the council was being exposed to”.

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