A comment from Councillor Phil Twiss, Cabinet Member for Finance DCC has prompted Owl to add more clarification on the plight of Woking Borough Council highlighted in this morning’s post: “Another one bites the dust”
Phil pointed out that Woking is a LibDem council. Indeed this is now a LibDem run council, Owl pointed this out quite clearly in the post, but the problem it is grappling with is one that it inherited from an earlier Conservative administration.
“We inherited enormous Conservative debts. We knew that decades of dependency on new future debt was hard-wired into supposedly long-term projects. These two factors – debt and a dependence on debt – already presented a financial survival project.
“Yet we are now uncovering a third and potentially more worrying financial inheritance: the mis-statement of debt. Uncovering more of that reality is essential, even if it makes unpleasant reading.” LibDem leader, Woking Borough
New discovery adds to Woking Council’s debt woe
George Rae www.wokingnewsandmail.co.uk
THE Liberal Democrats in charge at the Civic Offices claim to have uncovered another devastating threat to Woking Borough Council’s (WBC) already parlous financial position – the mis-statement of debt.
They say that new officially-audited accounts for Thames Wey Limited, which is fully owned by the council and responsible for multiple energy and housing developments in the town, uncover a string of overstatements of income and assets.
The documents reveal that the company has negative net assets of £19.4 million, as of the end of 2021, rather than the claimed positive assets.
A “restatement” of previously published accounts shows concern by newly-appointed auditors Menzies that old accounts were not giving a true and fair view.
For example, say the Lib Dems, the new documents demonstrate that, in 2020, ThamesWey Group accounts overstated turnover.
Financial statements incorrectly included £30.3 million inter-company revenue, effectively an internal transfer, in the group turnover, meaning the real turnover for the year has had to be reduced from a previously-claimed £61 million to £31 million – an overstatement of almost double the actual revenue.
In 2021, there were group losses of a further £17 million. A single loss of £13.2 million had been classified as “work in progress” when it should have been written off.
Cllr Ann-Marie Barker, leader of the council, said: “We inherited enormous Conservative debts. We knew that decades of dependency on new future debt was hard-wired into supposedly long-term projects. These two factors – debt and a dependence on debt – already presented a financial survival project.
“Yet we are now uncovering a third and potentially more worrying financial inheritance: the mis-statement of debt. Uncovering more of that reality is essential, even if it makes unpleasant reading.”
It follows grim warnings that WBC could be facing bankruptcy unless a balanced budget can be agreed by February.
Although the scale of council debt has long been known and debated – it is forecast to reach £2.4billion by 2024-25 and has attracted the concern of central government – the recent appraisal by the Liberal Democrat administration was the bleakest assessment yet.
With the council, in their words, “close to running out of money”, the Lib Dems proposed launching Operation Recovery “to rescue Woking”.
While local authorities cannot officially go bankrupt, they are effectively in that position as they declare a Section 114 notice, under which all non-essential and statutory spending is stopped.
A sobering assessment of the financial situation was delivered by the council’s finance director Leigh Clarke. In a document considering the council’s medium term financial strategy and presented to the council Executive, the section headed Executive Summary noted the need for “additional assurance on the financial position for each of the years 2023-24 to 2025-26 to provide assurance the expenditure can be contained within resources.
“If this is not possible, the council will need to commence discussions with the government on financial support and the finance director will determine whether a Section 114 report is appropriate.”
And this is what the Tories are working up to nationally – the economy will have been comprehensively trashed by the next general election which they will lose. Within about a year, the Tories will be saying it’s all the fault of the Labour administration when it will actually be the consequence of 13 years of Tory mismanagement. They’ll continue to push the lie until the following general election in the hope that the electorate is too dim to remember how the problems came about in the first place leading to them blaming Labour and electing another bunch of Tories who are in it only for their own benefit.
It’s hard to believe Phil Twiss read the article before commenting. Perhaps this reflects what the CEO was referring to, over another serious matter, “if you have read your agenda papers”.
I remember one of Phil’s cabinet colleagues from the previous administration signing off on a cost comparison to double the prices of beach hut rentals. Yet the comparison exercise had a standard deviation of approximately 650. Six hundred and fifty. That is one hundred and thirty times the recognised limits of significance for such figures. So did Cllr Chubb then also not read what he was signing, or did he simply not understand it?
Nice of Phil to highlight the legacy issues faced by our current administration.
Including an investment strategy placed under the “executive control” of the very senior officer previously responsible for delivery of the council’s relocation way over budget and with an inadequate chamber, as well as the murky histories of the Premier Inn and Ocean developments. Both of which at every apparent decision stage appeared to go out of their way to avoid achieving best value for the council tax payer. Accepting below market value for the Elizabeth Hall site and paying over the odds to take over Ocean.
A very senior officer who, despite various projects being unfinished and possessing such unique talents was rapidly made redundant following a review by the CEO immediately Phil’s party lost absolute control in 2019. No doubt with a nice confidentiality agreement. An departure surprising in itself, given that his projects are still not finished, which was followed by an even more surprising secret review which set in train the redundancy of a linked not quite so senior officer followed by the incredible shenanigans leaked a journalist last year with an investigation by East of England LGA in which the matters reported by the journalist strongly implied that the investigators had been misled.
Very nice of Phil to paddle in the cesspit of his own administration a mere 10 weeks before district elections. Unfortunately it will release a stink.