Woking Borough Council has been declared bust after a huge £2 billion debt sparked bankruptcy. It comes as a Section 114 notice has been issued on Wednesday (June 7) which means new spending will now be restricted.
Debts for the authority are even forecast to rise further still and reach £2.6 billion, though the impact on residents has not yet become clear. SurreyLive highlighted that in Croydon – which issued its third 114 notice last year – council tax was increased by 15 per cent.
Woking Borough Council’s chief executive, Julie Fisher, described the issuing of a Section 114 Notice as “a very serious matter” and spoke of a “severe financial position”. Leader of Woking Borough Council, Councillor Ann-Marie Barker, highlighted “the legacy of inherited debt” and said: “The notice makes clear the true scale of these challenges which are so significant that the council cannot simply deal with them on its own.”
READ MORE: Woking Borough Council officially bust as whopping £2billion debt sparks bankruptcy
The council is now required to meet within 21 days to consider the Notice. There are exemptions on spending related to the protection of vulnerable people, statutory services, and cases of pre-existing commitments.
Follow our live blog below for updates, explanations, and reactions to the news.
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14:33Christy O’Brien
How did the council rack up so much debt?
The section 114 notice did not happen overnight and thanks to the great work of my colleague Chris Caulfield we can see how Woking Borough Council ended up in this predicament.
He has a full explainer of how the council got to this point below:
14:24Christy O’Brien
“Unbelievable financial recklessness and incompetence”
ITV News political editor Robert Peston has also tweeted about the news, with a damning assessment of the council:
14:20Christy O’Brien
Council “very clear” about financial issues
Councillor Will Forster, deputy leader of Woking Borough Council, has reacted to the issuing of the Section 114 notice:
14:14Christy O’Brien
Council chief insisted town centre transformation was affordable
Before the ambitious plans to redevelop the town centre started, there were already warnings it could make a loss.
In 2014 then chief executive Ray Morgan insisted the £50 million loss could be paid back. You can read more on this story below:
14:06Key Event
What is a Section 114 Notice?
The Section 151 Officer and Interim Director of Finance today (June 7 2023) issued Woking Borough Council with a Section 114 Notice. This was done because the expenditure of the council is said to likely exceed the financial resources available.
It means the council can no longer balance its budget for the remainder of this financial year and subsequent years. A statement on Woking Borough Council’s website said:
The council faces an extremely serious financial shortfall owing to its historic investment strategy that has resulted in unaffordable borrowing, inadequate steps to repay that borrowing and high values of irrecoverable loans.
A Section 114 Notice stops all but essential spending and is intended to ensure the council can continue to provide vital services. There are exemptions that relate to the protection of vulnerable people, statutory services, and pre-existing commitments.
13:42Kieran Graves
‘Difficult decisions will lie ahead’, says leader of Woking Borough Council
Leader of Woking Borough Council, Councillor Ann-Marie Barker highlighted “the legacy of inherited debt” and said the Section 114 Notice makes the scale of the challenges faced by the council clear. She said:
My administration has been very clear about the huge financial challenges facing the council due to the legacy of inherited debt.
The Notice makes clear the true scale of these challenges which are so significant that the council cannot simply deal with them on its own.
We must work in partnership with the whole of government and its agencies to support us in delivering a robust Improvement and Recovery Plan.
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.
13:38Kieran Graves
‘Severe financial position’, says council chief executive
Woking Borough Council’s chief executive, Julie Fisher, described the issuing of a Section 114 Notice as “a very serious matter” and spoke of a “severe financial position”. She said:
The issuing of a Section 114 Notice is a very serious matter that rightly reflects the scale and breadth of the acute financial situation facing the council.
Through the commissioning of an independent financial review of the Council’s borrowing and loans to its companies, we have a comprehensive understanding of our severe financial position which informed the Section 151 Officer’s decision to issue a Section 114 Notice.
The Council is required to meet within 21 days to consider the Notice. I am preparing a response to this Notice for an Extraordinary Meeting of Full Council that is being arranged for Tuesday 20 June to meet this requirement.
She added:
Following the Secretary of State’s appointment of a Commissioning Team, I will be seeking their expertise and using their critical insight to help the council deliver an Improvement and Recovery Plan at pace to ensure we take actions that are in the interests of the public purse.
My first report on these actions will be to the Thursday 13 July meeting of the Council’s Executive.
13:34Key Event
Full report as council ‘officially bust’
13:32Kieran Graves
Woking Borough Council has declared bankruptcy
The Interim Director of Finance at Woking Borough Council has today (June 7) issued a Section 114 Notice in response to “unprecedented financial challenges” faced by the council. It means the council’s spending on non-essential services has now been restricted.