Tandridge, one of Croydon’s boundary neighbours to the south, has become the latest Surrey council to appeal to central government for a financial bail-out.
It is the second time that Tandridge District Council has sought a capitalisation direction – or emergency loan – in just seven months.
Tandridge is just the latest of a queue of local councils which have simply run out of money because of increasing demands on their services, rampant inflation and the failure of the Tory government’s annual settlement to properly reflect the authorities’ needs.
At the front of that queue to minister Michael Gove’s Department for Levelling Up office in Marsham Street with its Town Hall begging bowl is Croydon, which after a £120million bail-out in 2021 is now seeking to have £540million of its debts – mostly loans from the government – written off.
When Croydon first declared itself effectively bankrupt, in November 2020, it was only the second council this century to issue a Section 114 notice. But following the excessive financial pressures caused by covid, since then Thurrock, Northumberland and Slough have followed suit, Nottingham and Liverpool city councils have been placed under special measures, while Eastleigh and Medway are among other authorities close to financial collapse.
Last week, Woking in Surrey joined that list.
Woking has amassed debts of £2billion (Croydon’s General Fund debt is £1.3billion). There, the council has proposed a 2.99per cent Council Tax increase (Croydon’s Mayor Jason Perry has requested a 15per cent Council Tax hike).
Woking Borough Council deputy leader Will Forster told a council meeting last week: “We need help.”
According to Woking budget papers, the council borrowed about £1.8billion for investment purposes (or “playing monopoly with public money”, as Mayor Perry and Croydon Tories would describe it), but these investments are only bringing in £38.5million in annual revenues. Woking’s annual interest payments are predicted at £62million.
Woking’s financial management is under investigation by the Department for Levelling up Housing and Communities.
“Woking needs government support,” Forster told the BBC. “The council can’t afford to pay off its debt, not even service the debt.
“The papers are quite stark – £60million a year just to service the debt, repaying the debt is even more.”
As is the case with Croydon, much of Woking’s borrowing has been from the government, and was sanctioned by the government. Its budget has gone into a state of shock since the steady rise in interest rates over the past 12 months or so.
“At this point I cannot see how it can make a sustainable budget, which is terrifying,” Forster said.
Tandridge District Council’s request to government is unusual, since they have asked Whitehall for help to restore their reserves. A previous, similar request, made in August 2022, was rejected by local government minister Paul Scully.
The majority group on Tandridge council is made up of independents and the Oxted and Limpsfield Residents Group Alliance.
Council leader Catherine Sayer has written to local government minister Lee Rowley of a “potentially ruinous depletion of reserves which took place prior to the recent transformation of the council’s finances”.
According to a report in The Municipal Journal, in February 2020 it was discovered that “selected cost lines appeared to have been removed from Tandridge’s pensions-related budgets to the value of £920,500”.
In her letter to the minister, Sayer wrote: “You will appreciate that with material uncertainty regarding funding levels for 2023-2024, and the severe effect of inflation on the cost of delivering local authority services, the council’s financial position is far from secure.”
The MJ reports that Tandridge is forecast to overspend its 2022-2023 budget by 4per cent, or £447,000.
Read more: Perry to preside over record-breaking 15% Council Tax hike
Read more: Public’s furious reaction to Perry’s Premium Council Tax hike
Read more: Mayor Perry: ‘It’s going to get worse before it gets better’
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The financial crisis in local government nationally does not seem to present much interest to the main stream media as other areas of chaos this incompetent Central Regime has created, but even Tories must realise that if you only continuously cut grant funding in real terms for over a decade that eventually you must run into a financing problem.
That is especially true if economic headwinds are greater than expected and you have increased the responsibilities for Local Government function rather than reduce them to match reduced resourcing.
Perhaps these libertarian Tories are really Anarchist at heart and have a secret plan to allow a commune of vocationally minded individuals to take over local government functions and do the work just for the pleasure without reward.
It seems to be about the level of fantasy this ridiculous Regime has descended into.
Anarchist ? I often think that it is more likely a sort of “Trash the inheritance left to us buy our parents’ or grandparents’ generation” …ist
Whilst there are still a few well-meaning but naive folk who jolly well think that they could run a better show than the council on half the money, these are rapidy dying out, or are rather off the wall.
Look back at post WW2 Britain, and the incredible achievements of young and older politicians, Town planners, architects, and an array of other designers, geographers, economists and the like, who brought into being the Town and Country Planning Act, National Parks, Green belt, and the Festival of Britain –oh–and the people who set up the NHS, and those who nationalised the railways and the coal and the steel and the gas and the water ……
there was a national surge of energy, creativity and desire to make a better world, as well as a better Britain. It was successful.
Even Mrs Thatcher supported the European Union, but, she gave away the family silver, or sold it at rock bottom prices. I am of course talking of taking away the things that belonged to us, and selling them. The Gas, Water, Electricity, Sewerage, the Railways.
It is quite possible that there are asset strippers out there now who are eying up local authority functions, willing the whole edifice to collapse, so they can move in, jackal-like, to rip off any remaining meat, and suck the gristle, and crunch the bones.
In fact, all but a very few councils have lost their direct labour organisations, who mended the highways, maintained the parks, the sewers, and street lighting, and the hands-on parts of departments that ran old peoples’ homes, childrens’ homes and the like.
They now specify and tender out services to the private sector and contractors.
We seem to have lost our idealism, as a country, although we are incredibly generous and caring in other ways.
It is a great pity that Croydon and now, many other Councils, are now able to provide a service that is stripped down to the very basics.
The cherries went years back, then the icing, then the marzipan, then the top layer of cake. Now the rats are nibbling the bottom layer, from all sides, on top and underneath.
Excellent work Steven in publicising the myriad failings of our basket-case council.
Are there any forthcoming receipts from Brick by Brick sales, he asked hopefully? An update would be appreciated.
Thanks as ever.
Woking’s financial management is under investigation by the Department for Levelling up Housing and Communities.
Forgive me but what exactly is the Deparment investigating?
Would it be the idiot department that agreed those loans to speculate and gamble? Would it be the fools that changed the legislation and regulations to allow and actually promote that borrowing to fund central government shortfalls?
Would it be the absoloute morons that failed to evaluate how the borrower was going to repay that debt?
Would it be the reprobates that took that money knowingly and failed to let the electorate know they would be footing the default bill?
Would it be the auditors and controllers of public funds that idly sat fiddling with themselves while Councils burned taxpayers money and future money?
And who is footing the bill for this self investigation? The taxpayer?
I feel sorry for Woking to be so investigated. Thats like being beaten robbed and abused and then have the culprit come round in uniform with a warrant card the next day to take your statements. So exactly what kind of outcome does anyone think will come out of that investigation?
We appear to be now decending from farce into denzions of absurdity never plumbed by humanity outside of extremist regimes.
I appreciate that the DLUHC personnel currently in situ may not be culpable and should not be tarred or castigated in any way but respectfully Mr Gove should excuse himself and his department from this shambles and a real open enquiry takes place into what the hell is going on and who created the environment for this to happen.
This is similar to what happened at Croydon. The system is set up for Councils to fail. I don’t believe it’s down to the individual officers or councillors – there will always be some awful ones and I’m not excusing them, but it’s not the majority. We can see that Croydon’s ex chief-exec did some pretty bad stuff, but the Council’s financial situation was very weak in the first place – normally someone messes up, they get found out and kicked out and investigated (as is happening in Croydon) but it’s not normal for an organisation to then collapse; the system has created too many fragile local authorities who are surviving on the brink of collapse. This isn’t limited to Croydon – Councils are resource-deprived so they try and do something, like invest in property, or set up housing development companies, to try and secure their financial situations long-term, but because they have no in-house experience/expertise of doing this, they get it wrong and fail. There are some examples where Councils have done something different and it worked – Manchester airport is owned by the Greater Manchester authorities who profit from it (but that is a very long term arrangement) – I do think that attacking individual council officers and councillors misses the point somewhat and fails to fix the problem – when lots of authorities start to fail it’s clear that the system isn’t working, not one or two officers at one particular organisation.
I just looked at the Woking Council website to look at the party political mix– it was 16 Lib Dems, 8 Conservative, 3 Labour and 3 Indipendent.
All the Councillors looked like the sort of people who would not take stupid risks. They looked intellligent. They all looked like decent citizens.
I came to the conclusion that if Woking can get into difficulties, every council can.
Central Government over decades has forced councils to take investment decisions to try to generate funds to keep the municipal ships afloat. Some were unwise or went wrong without mismanagement or buying assets while paying too much.
Covid and resulting collapse of property values and income must have something to do with it too.
It was Conservative-controlled until May 2022 Lewis.