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Bankrupt Woking Borough Council will continue to operate - report

BBC Victoria Place shopping centreBBC
The town centre has been transformed beyond recognition over past years

A review into how Woking Borough Council fell into bankruptcy has found it borrowed £160m for purposes outside regulations and had "sub-optimal record keeping."

Key findings were published ahead of a council executive meeting on Thursday.

A council report said the authority would continue to operate, but with financial controls.

Documents said the council would continue to pay staff and deliver statutory services.

Last week, the authority revealed its debts were set to hit £2.6bn and issued a Section 114 notice which halted all spending on non-essential services.

Interim finance director Brendan Arnold wrote: "Local authorities however cannot go into administration or liquidation as they are backed by taxation and government.

"This means that all creditors are secured, contracts in flight are secure and the council will continue to pay staff and deliver its statutory services, particularly services to the vulnerable and homeless."

Key findings revealed the council had:

  • A weak financial control environment
  • Sub-optimal record keeping
  • Weak management review processes
  • Weak understanding of accounting guidance
  • Weak understanding of statutory requirements in respect of accounting arrangements
  • Insufficient resources generally to manage successfully the scale and complexity of the company structures, assets and liabilities that had been brought into existence by the council over many years
  • The absence of external audit opinions on the council's accounts since 2018-19
Skyscrapers
Skyscrapers more than 30-storeys high have been built

It was also revealed that the council had underpaid minimum debt provision for 15 years.

Mr Arnold said the authority had passed the majority of its £1.3bn loans from the Public Works Loans Board to its various companies, principally Victoria Square Woking Ltd and Thameswey Group Ltd.

But while most loans were correctly for capital purposes, a significant proportion - up to £160m - was likely to have been used to fund revenue expenses, which was not in line with regulations.

The ThamesWey and Victoria Square schemes saw the council borrow to build skyscrapers in the town centre and replace hundreds of homes on the Sheerwater estate.

Council chief executive Julie Fisher wrote: "There is no prospect that the council will balance its budget in 2023-24, 2024-25 or the successive years without external intervention on a very large scale."

She said the council would "require significant financial support from government".

Councillors will vote on recommendations next Tuesday.

The Victoria Square development
The Victoria Square development is home to shops and retail outlets
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