Woking council declares bankruptcy with £1.2bn deficit | Local politics

Woking council has declared it is effectively bankrupt after admitting a risky investment spree involving hotels and skyscrapers overseen by its former Conservative administration had left it facing a deficit of £1.2bn.

The Surrey council, the most heavily indebted local authority in England, said it had issued a section 114 notice on Wednesday in response to “unprecedented financial challenges” facing the town.

A section 114 notice is effectively an admission that a council does not have the resources to meet current expenditure. It becomes the latest English council to run into trouble after ploughing cash into risky commercial investments after other recent failures at Thurrock, Croydon and Slough.

Woking said that against its available core funding of £16m in the 2023-24 financial year, the council faced a deficit of £1.2bn.

“These challenges are so significant that the council cannot simply deal with them on its own,” said Ann-Marie Barker, the Liberal Democrat leader of the council, who took over from the former Tory administration after it was voted out in local elections last year.

“I understand the concerns and questions this will raise, and I am committed to maintaining transparency with residents and partners as we progress through this unsettling time.

“Difficult decisions will lie ahead as we seek to balance the council’s budget and address the unaffordable debt.”

Woking’s effective bankruptcy comes after ministers in Michael Gove’s levelling up department put the local authority into special measures late last month amid rising concern in central government over the scale of its debt problems.

Overseen by a team of expert commissioners after a review launched earlier this year, it is believed the local authority’s financial troubles are so significant they could have an impact on the national government finances.

The council said it faced the “extremely serious” financial shortfall owing to its “historic investment strategy” that had resulted in unaffordable levels of borrowing racked up during 14 years of Conservative control.

The programme of investments designed to transform the home counties town included a complex of sky-high towers, standing as the tallest buildings outside a major city in England, including a new four-star Hilton hotel, public plazas, parking facilities and shops.