Woking Council welcome government plans to cut risky council borrowing
Measures seek to prevent a repeat of Woking’s financial collapse
Woking Borough Council has welcomed proposed new government powers aimed at preventing excessive risky borrowing, following its own financial collapse due to failed investment plans.
Woking amassed debts of over £2 billion, resulting from a regeneration strategy that attempted to transform the town centre and areas like Sheerwater.
Problems with the plans between 2016 and 2019 led to drastic cuts in jobs and services, as well as significant rate hikes for locals.
The political landscape also shifted, with senior council officers leaving and residents voting out the long-standing Conservative administration.
In response, the government is considering activating powers to monitor council investment and debt, intending to spot early warnings before they turn into a crisis.
The government has already spent £500 million in bailouts for Woking, with more potential aid depending on the results of the council's asset sell-offs.
The new measures, and other possible actions, are part of a consultation that will run until 6th August.
Councillor Dale Roberts, deputy leader of Woking Borough Council, commented that the government’s consultation and proposed introduction of stronger safeguards are welcomed.
Roberts presented Woking’s current position as a cautionary tale, emphasizing the risks associated with the substantial borrowing executed by the previous administration in an attempt to fund an ambitious programme of regeneration and property investments.
According to Roberts, "Councils and investment companies are fundamentally different organisations, and it is important that governance and oversight reflect those differences."
He added that stronger oversight and earlier identification of risk are important to prevent similar situations elsewhere, suggesting the proposed measures as a step towards ensuring checks are robust to keep borrowing proportionate, affordable, and community-focused.
Woking’s debt reached nearly 100 times its annual budget and will be take on by the newly formed West Surrey Council.
Woking is not alone; Thurrock amassed £1.5 billion in debt through failed investment-financing borrowing. Both councils have since restricted excessive borrowing, according to the Ministry of Housing, Communities and Local Government.
The new measures aim to enhance oversight and transparency, ensuring borrowing across local government is affordable and sustainable.
Local government minister Alison McGovern reflected on councils like Woking and Thurrock, stating that poor investment decisions have burdened taxpayers with substantial costs.
She said, "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."