Government plans to cut risky council borrowing

New government powers aimed at cutting risky borrowing which could leave taxpayers footing billion-pound bills have been welcomed by Woking Borough Council.

The authority went bust with debts of more than £2bn in 2023 after investment plans failed.

Its regeneration plan to transform its centre and towns like Sheerwater between 2016 and 2019, wrecked its finances.

The result was jobs and service cuts, and left residents facing inflation busting council tax rises.

Senior council officers left and residents voted out the Tory administration.

The government now wants to track council investments and debt to spot early warnings to avoid crises.

According to the Local Democracy Reporting Service, it is hoped such powers will stop a repeat of the situation which has seen the government spend £500m so far bailing out Woking.

How these new powers would work, and what other measures could be used, will be considered in a consultation which will run until 6 August.

Woking council deputy leader, Dale Roberts, has welcomed the government consultation and proposals.

"The position Woking faces today highlights the risks associated with the scale of borrowing taken on by the previous administration to fund an overambitious programme of regeneration and property investments," he said.

Stronger oversight was essential to preventing similar situations happening again, Roberts said.

"Once we have fully considered the proposals, we will provide a comprehensive response to government," he added.

The council's debt was nearly 100 times its annual budget and will be taken on by the newly formed West Surrey Council as part of the local government reorganisation.

Other at-risk councils included Thurrock, which racked up £1.5bn in debt through borrowing to finance failed investments.

Both have curbed excessive borrowing since, the Ministry of Housing, Communities and Local Government says.

It is hoped the new measures will strengthen oversight and transparency, and ensure borrowing across local government is affordable and sustainable.

Local government minister, Alison McGovern, said: "In Woking, Thurrock, and other councils we've seen poor investment decisions leaving taxpayers footing a big bill.

"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," she said.

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