Woking Borough Council will require significant financial support from central government as it makes the mandated improvement and recovery plan its “primary focus” to “drive the transformational change required to support recovery”.
That was the conclusion of Julie Fisher, chief executive of the authority, in a statement in response to the issuance of a section 114 notice on 7 June.
The council will need to approach government to explore the prospect of financial support and to seek views on the provision of such support, Fisher said, in the face of what she called “unprecedented” challenges. Woking has “no means of funding the financial deficit” itself, she said.
She also noted that “difficult decisions” would have to be taken now to enable the council to operate with a substantially reduced revenue budget.
Actions will need to be taken to bridge the council’s budget gap of £9m in 2024/25; these will be presented as planning assumptions in the medium term financial strategy report to the 13 July meeting of the executive.
Fisher recommended that expenditure controls remain in place beyond the section 114 notice and remain a feature of how the council conducts its business for “some years”.
A revised budget may need to be prepared and received by council in late summer to assist with balancing the budget in 2023/24 and 2024/25, she added.
Fisher said the council would have to recognise that it would “no longer be able to afford to deliver the current range of services or maintain some services at existing levels”. There would also have to be a “significant rationalisation of the current service […] to live within a substantially reduced financial envelope”.
Staffing reduction would also be necessary, she said, while the council will need to prioritise services that protect the most vulnerable residents.
Fisher noted that a financial recovery plan was being developed by Brendan Arnold, interim director of finance and section 151 officer at the council, in liaison with the corporate leadership team and the government-appointed commissioning team.
Moving forward, the medium term financial strategy and plan will be reported quarterly to the executive and council, while actions must be established to bring the housing revenue account “back into balance and to create a 30 year business plan”, she said.
Additionally, Fisher recommended that an assets disposals strategy, alongside a commercial strategy, be developed “to optimise the returns from the disposal of the council’s and companies’ assets for the benefit of the ‘public purse’ in the context of the need to pay off debt”.
The section 114 notice issued by Arnold laid out the “stark” financial position facing the council. Against the core funding of £16m available in the 2023/24 financial year the council faces a deficit of £1.2bn.
As such, Arnold stated that there was no prospect of the council balancing its budget in 2023/24, 2024/25 or successive years “without external intervention on a very large scale”.
In his review of the council’s financial affairs, Arnold identified a range of key issues that had caused the severe financial crisis at Woking, which were assessed in a recent Room151 article.
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Reflecting on the future for Woking in her statement, Fisher said: “The recovery challenge is unprecedented and will require a significant step change in the council’s approach to delivering change and managing and governing its commercial interests.
“In recognising the need to deliver a recovery plan at the scale and pace required, the council will need to secure the necessary additional capacity, skills and capability to support this recovery.
“Whilst the council will rightly focus on the future and recovery, it also has a responsibility to ensure it learns the lessons from the past and the decisions and actions that have contributed to the challenges now facing the council. This will be in the interests of the public and communities of Woking.”
Fisher, with the support of Arnold, has requested that incoming auditor for the 2023/24 financial year Grant Thornton undertake a value for money review of the decisions relating to the council’s investment strategy under their audit code of practice responsibilities.
“The report produced will be a key component of the council understanding the lessons and taking accountability,” Fisher added. “Without this understanding and accountability it will be significantly more challenging to build the required level of momentum behind the recovery and improvement plans.”
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