PWLB lent Woking £10m two days before the government appointed commissioners

27 Jun 23

Woking was lent millions of pounds of public money just two days before the government published a damning review into its finances and sent in commissioners, leading to accusations of a “lack of any joined-up thinking” across government.

Image © Simon Wicks

The £10m loan, made on 23 May, came months after the Department for Housing, Levelling Up and Communities had announced it was carrying out the review, having raised concerns about its growing debt in October 2022.

PWLB lending guidance states the lender “will not typically advance new loans if there is a more than negligible risk that the newly advanced PWLB loan will not be repaid without future government support”.

On 25 May, the government published its findings that Woking – the most indebted council in the country relative to its size, with £1.8bn of borrowing – had paid “insufficient regard to the level of risk the council was being exposed to”, and appointed commissioners.

The council issued a Section 114 notice two weeks later.

The May loan followed several others this year: £10m on 27 February; £5m on 3 March; £10m on 22 March; and £20m on 6 April – all approved since the review was announced.

Woking Borough Council declined to comment on what the loans were specifically used for.

Most of its recent borrowing has been related to two major ongoing regeneration schemes.

Parliament’s Public Accounts Committee chair Meg Hillier said: “Our committee has long warned of the parlous state of local authority finance, and the dangers of risky commercial investments by councils underpinned by taxpayer money.

“Sadly, we can see the consequences of leaving these warnings unaddressed now playing out in Woking.”

The committee on Friday published a report highlighting the huge backlog in local audit, which it said risks obscuring similar problems in other authorities.

“We have called on the government to get its hands round this problem as a matter of urgency – but the continued and extraordinary lack of any joined-up thinking that we see on these issues sadly does not provide confidence that it will do so in the near future,” said Hillier.

A Treasury spokesperson said the department “works closely with DLUHC [and] other government departments to monitor risk in the local government sector”.

“HM Treasury will generally consider that where a local authority is actively and constructively engaged with government on addressing financial risk, that local authority is sufficiently managing risk of non-repayment,” the spokesperson said.

“This includes where a local authority is working with the government as part of ongoing financial support measures and can be in advance of commissioners being in place.”

The Treasury also said councils having “ready access” to the PWLB for refinancing brings benefits, and will therefore lend for this purpose even if the authority is carrying out otherwise ineligible activities.

“We clarified our lending guidance to make clear that investments for financial return and the excessive buildup of debt was not appropriate use of PWLB resources and we continue to actively monitor PWLB lending,” the spokesperson added.

Did you enjoy this article?