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Let your next career move come to you.

WTF Woking

"Woking Borough Council is a small district that has engaged in commercial investment activities since 2016. As a result of this, as of December 2022 the Council had debts of £1.9 billion, with plans to increase it to almost £2.4 billion by 2024/25, and now faces significant impairments against key assets. This makes Woking the most indebted council in England compared to its financial size, with a net budget of £24 million and core spending power of £14 million."

https://questions-statements.parliament.uk/written-statements/detail/2023-05-25/hcws813

Maybe local councils should be conduits for spending public money to provide services at a local level rather than quasi-commercial enterprises that have to generate their own funds?

 

Call me a radical.

 

Looks like over a third is on the town centre shopping centre. Presumably build it and they will come and pay steep rates. 

Chuffy the problem is the govt hides behind LAs for some of the most serious state liabilities (elderly care, social services etc), but takes all the money they raise from rates and only gives half back. They also force LAs to hold referenda on >3% council tax increases, compared to central govt that only has to get it passed by their own party. So lots of councils are having to go for broke to try and cover their statutory responsibilities. 

Are we to assume from the lack of posts on this thread from Amit, Barney etc bemoaning the irresponsibility that this was a Tory led council from 2016 until very recently?

this is hilariously shocking.  How on earth was this allowed to happen?  Don't they have to file accounts with DOEHLG (or whatever it's called this week?)

look you just borrow cheaply to invest in commercial property.  yield is fantastic. pays for services.

 

until it all goes KABOOOOOOOOOOOOOOOM!*

 

(thank f i'm not in property. it's a bloodbath)

 

Currently taking advantage of the falling knife of com prop.

There are nice opportunities for sale and leaseback as banks are getting v tight.  And in 10 years (or less if they break or default), work will begin on a rather smart townhouse or two. Yield is about 7% against RPI.

Client of mine did a nice job of taking money to allow various banks to surrender their leases and then shifting the empty properties before people realised that owning an empty high street shop was a bit of a disaster.

Are we to assume from the lack of posts on this thread from Amit, Barney etc bemoaning the irresponsibility that this was a Tory led council from 2016 until very recently?

You have me mistaken for a Tory. Floating voter. Also Woking is shit.

it's almost as if reducing the funding to local councils (down 60% since 2010 IIRC) while they face increased costs from an ageing population and they have severely constrained powers to raise funds turned out to be a bad idea....

the more I read the more depressed I get at the state of british politics and governance. 

Is being politically apathetic easier? Rofers please enlighten me.

We don't know any detail.  But now Thurrock Council have to have Essex County Council sign off a new bathroom for Mrs Smith because of something similar

This stuff doesn't happen anywhere near as much in the private sector.  Incompetence hasn't been used but perhaps could have been....

agreed piechucker, but any foresight exercised by the Cameron administration would have seen that depriving councils of income might see them engage in more risky behaviour to cover their costs, as with these property investments (did councils do this to this extent before the 2010s?).

the link is:

increased obligations (increased outgoings) vs reduced funding. The local government equivalent of taking on a bigger mortgage but taking a lower-paying job at same time / going part-time.

in that scenario you have to cut your expenses (hence why so many councils have moved to only collecting bins every 2 or in some cases 3 weeks, charging for some garden waste collections, letting local authority roads deteriorate), but also look for new ways to make money (hence the property deals and borrowing, because interest rates were apparently going to be low forever), in order to cover your core obligations like adult social care and care for vulnerable kids / special needs education etc...

 

Or......

Lots of spending pressure

Form a tiny dissident group with exec influence

Convince nodding dog civil servants that debt-funded investment will produce enhanced yields

Invest using cannon fodder contractors to deliver snazzy investment

Lets the brown envelopes ensue

Contractor fails

Appoint expensive but competent contractor at short notice to complete project, or abandon.  Either outcome is an impairment 

Must have missed that bit of the private sector where you have a statutory duty put on you to do work you otherwise wouldn't be interested in, where the govt restricts your ability to directly charge customers and where it take 50% of the money it forces you to charge people occupying business premises driving many of them out of business. 

Yes there's plenty of shit that goes on at councils, but the vast majority of the shambles in local govt is owned by the populist w**kers runnning Westminster. 

"Since the mid-2010s, some local authorities have sought to build up portfolios of property in order, amongst other aims, to generate a profit from commercial lettings in order to increase their revenue budgets. This has taken place in the context of substantial falls in central government grants to English local authorities since 2010."

So hang on … taxpayers who live in places other than Woking are going to pay for this and the statutory services to Woking residents who voted for the jokers who delivered this black hole will still get met?

And Woking has loads of shiny new buildings? Sounds like the corrupt Tories did a damn good job for their voters.

I mean onviously corrupt and irresponsible. But like everything else in the UK as things collapse overleverage and take what you can get away with is the rational strategy.

And wasnt “borrowing at record low interest rates to invest” exactly the anti austerity agenda recommended for the nation by the Left?

I have no idea who the good and bad guys are any more but its no wonder things are falling apart given the governance and incentives in the UK.

 

Canary Wharf, I see your point but I don't think it's right that essential council services for Woking residents should get cut off e.g. fire and rescue, education, social care, because of the egregious behaviour of the previous council. The council is now banned from new spending other than cases where the council must legally protect vulnerable people and for services it must cover by law - so there will be cuts. Not yet clear exactly what.

The shiny new buildings do improve the look of central Woking, but they are a white elephant - under occupied and generally unnecessary, and in no way compensate the people of Woking. Given a choice, they'd prefer to keep their council services. The previous council was not open with the public about the scale of borrowing or the risks involved - probably because most didn't understand the implications. They were either out of their depth or knowingly hid the problems as they spiralled (probably a combination), and in fact acted illegally in cycling the debt... there's a lot of anger locally. But the motivation to find an alternative revenue source is understandable.

The debt equates to about £47,000 debt per household in Woking, so it couldn't be paid off. The central government fund should take some responsibility for the scale of the lending too. (The staggering amount Woking Borough Council is in the red as 'third largest debt of all UK councils' - Surrey Live (getsurrey.co.uk))

Fire Services for Woking would fall under the umbrella of Surrey County Council.

Anyway, having a read of a relevant independent external report. Still part way through. In short, the Council, read elected representatives went mad on two redevelopment schemes, over £1Bn. You would have thought the local Council staff would have said "are you sure?" and pointed out the implications but no. The Finance Dept at Woking Council didn't have a clue about commercial finance and lacked the relevant accounting skills so couldn't advise the Councillors appropriately. It didn't help that they misunderstood the finance risks. It seems to be a calamity.

Clove, forgive me, you cover off many of my points. The recycling of debt is an interesting one. From my skim reading of the external report, the Council borrowed the money from Central Government, lent it to the JV then repaid the original loan from these funds? Something like that!

abuse of public funds should be a criminal offence.  the risk to councils who do this is minimal - it's not their money.  I expect the individuals involved will not suffer financially. 

this is not the fault of councils

the fault 4 this lies entirely in lap of the austerity promoters. they actively encouraged councils 2 act as asset managers in order 2 make up 4 spending cuts

austerity backfires

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