Can Woking Council Afford to Borrow More?

There is a new disease in Westminster called "Deny the Facts, Sell the Fiction" it seems to be highly infectious and has now spread to Woking.

As Woking Council sets its budgets this week councillors are asking if a local authority can afford to take on such huge debts. This question is neither asked nor answered in the Council's medium term financial strategy.

Councillors are being asked to confirm that it is prudent to increase the Council's long term borrowing from the current £1.84 billion to £2.4 billion.
"Can Woking Council afford to take on such huge debts in the current financial climate?" asks Liberal Democrat Leader Ann-Marie Barker "We haven't seen the evidence that the Council can afford the repayments"

Taking on a Loan has consequences - ask any bank if you can borrow hundreds of thousands to buy a house and you will be asked lots of questions to determine whether you can afford the repayments and still feed your family, pay for your car, pay your credit card bills, clothe your children and heat your home.

Council income is declining, interest rates on new loans look set to rise. The Council's capital investment plans are "bold and ambitious", but can we afford them?

The financial review produced for the Council by EY highlights the reliance of the Council on its wholly owned companies to service debts. "The risk is driven by the ability of the Council's investment position to help service these loans, with the performance of the group companies integral to Council's ability to pay back debt" say EY.

"The concern is that the group companies will not generate enough revenue to support these payments" explained Cllr Barker.

"These are serious issues the Council will face in the coming years" points out Cllr Barker. Liberal Democrats instigated the Financial Review to get a real understanding of the Council's financial position. We now need to act on the risks identified by EY and to move ahead promptly with a review of the purpose, performance and potential of Council companies to ensure they are delivering for residents. In particular, we need to make hard decisions on Thameswey Central Milton Keynes, which has cost £30 million to date and which, it was recently revealed, will not show a return until the 2060's."