Woking Borough Council set for massive £785 million Government bail out

Woking Borough Council has been offered an “exceptional” £785 million Government bail out – if it passes a 10 per cent tax hike.
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The huge package comes in several pots including £454m for the servicing of its debt, known as minimum revenue payments, and £331m in “capitalisation directives” – where a council can treat revenue costs as capital costs.

The council will also be given money to turn around it’s “currently negative” reserves, with a view to this acting as a buffer in future years.

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The figures were published in papers ahead of its Monday March 4 meeting. In order to get the massive bail out, the council must pass its tax rise, agree to increased fees and service cuts, and continue with its improvement and recovery plan, which included £8.4m in spending cuts already agreed.

Woking Borough Council (Image Chris Caulfiield)Woking Borough Council (Image Chris Caulfiield)
Woking Borough Council (Image Chris Caulfiield)

Woking Borough Council declared itself effectively bust last year with billions in debt and deficit. It came on the back of the financial mismanagement of a regeneration plan and accountancy practices that failed to set aside enough money to cover the borrowing.

The most significant loans the council took out were to the ThamesWey Group a wholly owned subsidiary, and Victoria Square Woking Ltd.

As of December 2023, the council had made £338m of loans to ThamesWey Housing to provide homes in the borough, £85m to ThamesWey Energy and ThamesWey Central Milton Keynes, to further its energy efficiency policies, £195m to the ThamesWey group relating to the Sheerwater project, and £713m to Victoria Square Woking Ltd for the town centre regeneration project.

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The council also owed £170m in 2024/25 alone, nearly 10 times Woking’s net revenue budget of £19m, in minimum debt servicing.

This package, if agreed, would see the council have enough money to cover any further shortfalls forensic accountants uncover and began its rebuilding process.

Full details of the Government’s Exceptional Financial Support (EFS), are expected to be published ahead of the meeting next week. The report today reads: “The approach taken by Government therefore allows the council to set a legal budget for and continue to provide services in 2024/25.

“Future years will be subject to further work, linked to Asset Rationalisation and Debt Reduction plans that the council is producing.

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“The EFS will come with a requirement that the council should take all reasonable action and necessary steps to minimise the financial risks and reduce its levels of debt.

“The support will come with specific conditions, that are likely to be linked to the actions required in the Improvement and Recovery Plan.

“The Government response to the request for EFS will be circulated to council members when it is received.”

Deputy leader of Woking Borough Council Councillor Will Forster, said: “The Liberal Democrats running Woking Borough Council have proposed the authority’s first truly balanced budget in a decade that helps the Council recover from the effective bankruptcy they inherited.

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“The draft budget delivers significant savings, over £8 million, yet mitigates their worst impact.

“It secures exceptional financial support worth £785 million from the Government, as well as identifying transformational funding, initiating community solutions and will quadruple investment in social housing.

“As part of the package of Government support, the council has been asked to increase its small share of Council Tax by 10 per cent.

“This increase is,in practice, a 1 per cent rise in the total council tax bill, or the equivalent of 50 pence per week on a Band D property.”

He added that the council is to expand the current hardship relief scheme to help those most impacted by the cost of living crisis.

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