Woking Council faces £300 million Victoria Square Black Hole
- Victoria Square Woking Limited has assets only worth up to £445 million, according to Woking Borough Council figures to be presented today
- This compares to debts associated with the embattled project of £745 million
- As a result, Woking Borough Council faces negative equity and a £300 million impairment on its loans to the project
One of Woking Council's key companies, Victoria Square Woking Limited, owner of Woking's new shopping centre, residential development and hotel, has associated debts worth nearly twice the current value of its assets, in the first estimate of the financial black hole associated with the embattled project that has come to dominate Woking town centre.
Assets associated with the project (including the new Victoria Place shopping centre, residential development and hotel) have a current estimated value of up to a likely maximum of £445 million, according to figures to be presented today by the Woking Liberal Democrats within the first local budget under the new administration.
This compares to debts owed by Victoria Square Woking Limited to Woking Borough Council of £745 million. As a result, loans by the council to the arms-length company are not fully backed by financial assets, and represent a financial 'black hole" of at least £300 million.
Cllr Dale Roberts, Portfolio Holder for Finance and Economic Development at Woking Borough Council, comments: "Victoria Square suffered from enormous cost overruns, far in excess of its original scope as a regeneration project. Many years of gradual mismanagement allowed this debt to balloon, without the value of the underlying projects growing by anything like the same proportion.
"This underlines why we implemented new controls on the business plans of Council-owned companies. It also underlines the enormous challenges that we now face ahead of tonight's local budget meeting. There will not be easy or quick solutions. Responsible decisions to start putting Woking Borough Council on a more sustainable future financial path could take decades - but we are gradually rebuilding a Council that puts local residents first again."
This situation is among many other challenges to be covered by tonight's Extraordinary Meeting of Woking Borough Council from 7pm Thursday.
Watch in person at WBC Civic Offices, or online here: https://woking.public-i.tv/core/portal/webcast_interactive/748629
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Steps taken by the new Liberal Democrat administration in beginning to stabilise Woking Council finances so far include:
- Shared with residents the news of Conservative losses within the Thameswey Limited group of companies, where newly-audited accounts (22nd December 2022) showed that in 2020 Conservative Councillor Directors overstated the value of both sales and assets, uncovering £30 million of non-existent revenue, £14 million of extra costs and increased negative net asset values
- Reduced Victoria Square borrowing requirements by £13 million to date (as of 1st December 2022) compared to plans inherited from the Conservative administration
- Paused the Victoria Arch project which had already identified increased costs of over £53 million (14th July)
- Removed Councillors from roles as directors of Council-owned companies, bringing in independent management and public scrutiny (21st July 2022)
- Set in motion a long-term strategy to stop WBC being a banker and a property developer and concentrate on delivering affordable services for its residents
- Published the Ministerial warning letter addressed to the previous Conservative leader on financial mismanagement, following election victory (17th May 2022)
- Led on all efforts from opposition to reduce WBC borrowing and expose asset valuations and income gaps, including initiating the EY Independent Financial Review of 2021-2020
- In opposition prevented the Conservative attempts to lend £250 million to an outside property developer
For media enquiries please contact:
Cllr Adam Kirby, group head of publicity, Woking Borough Council Liberal Democrats