Gove asks commissioners to take reins at council £1.9bn in debt

The Secretary of State for Levelling Up, Housing and Communities has sent commissioners into Woking Borough Council as part of an "urgent" intervention package, after an external assurance review detailed the local authority’s exposure to an "exceptional level of financial and commercial risk".

Michael Gove used his powers under the Local Government Act 1999 yesterday (25 May) to intervene at the council.

According to Government documents, as of December 2022, Woking is the most indebted local authority relative to size in the UK, with £1.9bn in borrowing compared to a core spending power of £14m. A further capital financing requirement to 2025/26 extends the debt to £2.4bn.

Two large commercial schemes in the council's portfolio account for the majority of the debt, the regeneration of Victoria Place through the company Victoria Square Woking Limited in the town centre, and the regeneration of Sheerwater housing stock and public realm facilities.

The council is also facing inflation challenges and pressures on car parking income and commercial rent.

Based on the outcome of an external assurance review report commissioned in January 2023, Gove was not satisfied that the pace or scale of the council's response was proportionate to the issues it faces.

The resulting intervention package will see three commissioners appointed – Jim Taylor, Carol Culley and Mervyn Greer – to exercise all functions associated with the financial governance and scrutiny of financial decision-making and strategic financial management of the authority.

Their powers will extend to commercial decision-making and all functions associated with the governance, scrutiny and transparency of strategic decision-making.

Decisions on redesigning the authority's services, appointing or dismissing senior officers and statutory offices, and officer structure for senior positions will also come under their control.

In addition, the council must follow directions set out in the intervention package. This includes a direction to prepare and agree on an improvement and recovery plan, setting out how the council will achieve financial sustainability and close its budget gap, within six months.

In a letter to Woking's Chief Executive, the Department for Levelling Up's Deputy Director of the Local Government Finance Stewardship, Suzanne Clarke, wrote that the Secretary of State "considers the failures of the Authority's compliance with its best value duty in respect of the functions specified in the Directions sufficiently urgent" to circumvent a requirement in the 1999 Act that the authority makes representations before intervention.

She added: "After careful consideration of the evidence provided by the reviewers and officials, the Secretary of State considers that there is a pressing case for urgent government action to protect the interests of the residents and taxpayers of Woking, as well as national taxpayers.

"The financial challenge is acute, and the Secretary of State is concerned that key decisions need to be taken in the coming weeks and months to secure Woking's financial position, as well as provide assurance that your Authority is taking all steps necessary to comply with its best value duty."

Welcoming the intervention, Cllr Ann-Marie Barker, Leader of Woking Borough Council, said: ""My administration is very clear about the huge challenges facing the council due to the legacy of both the extraordinarily high and disproportionate levels of debt that we have inherited from the previous administration. We are also very clear and focused on the significant risks that the council is now facing up to as a result of that debt.

"We also recognise that these challenges are so significant that the council and its officers cannot deal with these on its own. We therefore fully acknowledge and accept the findings of the report and welcome the support set out by the Minister in his letter."

She later added: "I recognise we need to deliver our plans for recovery of the council's finances with greater pace and urgency and we face difficult decisions in the months ahead. I will work with my officers to ensure, with the support of the commissioning team, we have the capacity and experience to deliver the improvements needed.

"I remain committed to keeping residents, businesses, and community partners fully informed as we progress through this process and develop the detailed plans for recovery with support and oversight from the commissioning team."

Adam Carey