The Department for Levelling Up, Housing and Communities (DLUHC) has said it is imperative that Woking Borough Council “does all it can to manage its financial position and makes the tough decisions that are necessary to protect public money”.
Lee Rowley, parliamentary under-secretary of state for local government and building safety, made the statement in his response to the first report from commissioners Jim Taylor, Carol Culley and Mervyn Greer, which was delivered after three months of government intervention at the authority and produced on 31 August.
Both the report and Rowley’s response were published yesterday (19 October).
Writing to the commissioners in response to their report, Rowley said he noted the gravity of the situation at Woking and agreed with the assessment that the scale of the council’s challenge “should not be underestimated”.
Rowley said he also agreed with the commissioners’ assessment that “the most difficult decisions are yet to come”. He said: “It is therefore critical that the council continues to cooperate with you to address its financial position, strengthen its scrutiny and governance systems and build the capacity and expertise needed meet the challenges it faces.”
In their report, Taylor, Culley and Greer noted that the revenue gap for 2024/25 had widened from the initial forecast, including a further analysis of the capital financing charges. The latest 2023/24 budget monitoring has identified an increasing projected overspend in year to date, due to corporate financing costs, further underperformance of commercial assets and overruns in some departmental budgets, they said.
In addition, the Housing Revenue Account (HRA) has been found to be further in deficit. “There is a significant lack of data required to enable due diligence on many of the council assets in order to produce a meaningful asset strategy and thus enable any subsequent due diligence processes. Furthermore, pressures on the organisation will continue to grow in the next six months as difficult financial decisions will need to be made by the council to mitigate this whole situation,” the commissioners wrote.
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The commissioners also said that once the council’s financial position is fully clarified, savings made through staffing and service reductions “will not themselves be sufficient to deliver a balanced budget, as the scale of the capital financing costs associated with the commercial and regeneration activity cannot be contained within the resources reasonably available to the council”.
Woking will therefore need to engage in talks with government about support, they said.
The authority’s Improvement and Recovery Plan and its first report on progress was approved by full council on 22 August 2023, the commissioners noted. They also said that members and officers at Woking “have been very cooperative, open and transparent which has helped in the early days of intervention. The council is open to advice and support [and] commissioners are listened to.”
But there is still much to do, with some issues expected to take a long time to resolve, the commissioners said. The most difficult phases of the council’s recovery are “yet to begin”.
The commissioners concluded: “The asset rationalisation strategy is in its infancy and despite recent best efforts there is a need to update financial systems and reporting mechanisms. The position of the wholly owned council companies and joint ventures is being evaluated and this is not a straightforward task. The council savings plan is clear, yet savings are only to be realised in September 2023 and February 2024. The role of scrutiny is to be reviewed and the area of governance surrounding the council companies remains as work in progress.”
Some of the next phases of work include the establishment of a new service delivery offer and the development of a revenue budget to support that offer over the Autumn. The setting of the budget in the Spring of 2024 will be “pivotal”, the commissioners said. Significant reductions in the organisation’s headcount will also be made as part of an organisational transformation process, while “extensive work” will be required to develop and deliver the asset rationalisation strategy.
Time to deliver
Woking Borough Council chief executive Julie Fisher also wrote to the commissioners in late August to provide the first of her three-month updates on progress against the government directions. The note has also just been published.
Emphasising the Improvement and Recovery Plan, Fisher said she was aware of the significant action the council would need to take and that it was “one thing to produce an Improvement Plan [and] another to deliver it”.
Fisher also noted progress on identifying savings to bridge the authority’s business-as-usual budget gap of over £11m. “However, we now need to apply a laser-like focus to ensuring that we deliver against these savings,” she wrote. “I know that achieving these efficiencies is integral if we are to build credibility with government and show that we have the ability and processes in place to deliver further savings.
“As you are aware, our Q1 Budget Monitoring report has indicated that we currently have a £6m overspend against our general fund, suggesting we still have significant work to do to ensure we have robust financial controls in place. Budget holders are currently undertaking a line-by-line review of all service budgets, to identify savings that can mitigate the overspend. The results of this review will feed into future budget monitoring reports.”
Fisher also highlighted that the next three months would pose challenges in relation to communications and engagement, with councillors needing “to have access to the right information to enable them to take high-quality and evidence-based decisions, alongside a clear narrative to help them explain these decisions to residents”.
Woking recently outlined that it would ask the government for £57.7m to help complete its £492m Sheerwater Regeneration Project.
Eugene Walker became interim director of finance and s151 officer on 1 September 2023.
The authority was issued with a section 114 notice on 7 June by previous interim director of finance and section 151 officer Brendan Arnold.
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