WOKING'S £490 MILLION VICTORIA SQUARE WRITE-DOWN CONFIRMED
Professional valuation confirms worst fears of new administration
Investment write-down exceeds £490 million after audited accounts published
Uncertainty on further funding for Victoria Square project beyond May with imminent reports into financial implications for Woking Council itself
Woking Borough Council faces the prospect of a £490 million write-down in the valuation of Victoria Square Woking Limited (VSWL). This adds to potential financial losses on the loans the Council previously made to the company.
The company (VSWL) is the immediate owner of Woking's new shopping centre, residential development, and hotel - though backed by a longstanding agreement with Woking council. Its financial position is represented in newly-released accounts for 2021.
The previous administration approved this development along with council loan funding in excess of £750 million to enable construction and to fund operating losses for a number of years. All of the risks of this development were left with the Council to manage.
Since taking control of the Council in May 2022, the Liberal Democrats have pledged to get the Council's finances under control and embed affordable, responsible and sustainable principles into its borrowing and investment decisions.
This financial loss reported in the 2021 accounts of VSWL represents a financial legacy of decisions made by the previous, Conservative-led administration, at that time.
Cllr Ann-Marie Barker, Leader of Woking Borough Council, comments: "These belated accounts confirm our worst fears. However, this transparency is an essential step in a long and forensic discovery process.
"The reality of the 2021 accounts was taking place while our efforts to uncover it were being dismissed and played down by the Conservative leadership in control at the time. Our campaign for transparency and caution over the viability of this project reached a turning point that year, with the initial independent financial review of Woking Council secured by the Liberal Democrats from opposition two years ago.
"Since taking over the council in May 2022, our push for transparency has gathered momentum. Now, with this report and other upcoming expert advice, we will be able to plot the long course for recovery."
Cllr Dale Roberts, Portfolio Holder for Finance and Economic Development at Woking Borough Council, comments: "Even though we had fully anticipated massive losses and signalled them earlier in the year, this is still devastating news. It shows the degree to which our Borough has been failed by Conservative leadership - and the enormity of the challenge we're undertaking.
"As soon as we won last year's elections, we took immediate action to limit the damage. First, we reduced the period for which we would commit working capital to VSWL from ten to five years. Then, we began to put in place the missing systems and processes to properly run a commercial operation - and to protect the long-term interests of all Woking residents.
"Now, these accounts will further inform ongoing work being carried out by public sector finance experts, who we commissioned earlier this year to better understand the sustainability of the council's own annual budget.
"Looking ahead, it would be irresponsible to speculate on the details and timings of what happens next. However it is responsible to be transparent about the scale of this situation. Only complete transparency will enable our commitment to finding solutions as soon as possible."
Note: Findings of the central government-appointed Review Board into Woking Borough Council finances have yet to be reported.
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Newly-published accounts as mentioned above for Victoria Square Woking Limited, https://find-and-update.
FULL NOTES TO EDITORS AND EXPLANATORY NOTES IN FULL VERSION ATTACHED