WOKING Borough Council is expected to approve a budget for 2023-24 at its extraordinary meeting on Thursday evening – but is unlikely to remain master of its fate for much longer.

A balanced budget has been set with the use of £8.3million one-off reserves, although council papers accompanying the agenda suggest a far bleaker future. The need for government assistance now seems inevitable. 

“It is not evident at this stage how the council will establish a balanced budget for 2024-25,” says the report. 

“The council is in the territory of S114 but as of the date of this report a S114 Notice is not required. This report, however, may lead to the issuing of a S114 Notice in 2023-24 as work on the 2024-25 budget progresses.”

A Section 114 is effectively the council being unable to finance its budget and relying on government help to continue functioning.

Over every financial discussion looms the council’s mountainous debt, forecast to reach £2.4billion by 2024-25.

Cllr Will Forster, the deputy leader of the governing Liberal Democrats, said: “Woking needs government support. The papers are quite stark. It’s £60 million a year just to service the debt,  repaying the debt is even more.

“We need help. I cannot see how the council can make a sustainable budget in 2024-25, which is terrifying.”

Cllr Dale Roberts, the holder of a series of financial portfolios for the council, added more detail to the council’s woes.

“The General Fund, which, in essence, is spending on services [£44million] is partly covered by council tax of £11.4million, the rest coming from commercial income, car parks, and grants, fees and charges.

“But council tax is only 25% of what we need to run the council, and that’s before we get into interest costs.”

Central to the debt debate is the provision of MRP (Minimum Revenue Provision), which is the amount the council sets aside for the repayment of debt.

Critically, the council has historically not included MRP in budget calculations.

“It is exactly like congratulating oneself on a household budget without including the mortgage repayments,” Cllr Roberts added. “The council has been repaying existing borrowing with new borrowing in a process of circular financing. This is largely why the debt is set to increase to £2.4b.

“Any material change to the current provision for MRP in the general fund would be far greater than any practical savings the council could make. A balanced budget could not be achieved without a negotiated [with the Department for Levelling Up, Housing and Communities, DLUHC) solution to this.”

A DLUHC team is presently investigating the council’s finances and is expected to report in the coming weeks.

“A prudent view on current debts of around £1.8billion would be to set aside £36 million each year,” Cllr Roberts said. “But prudent is a view, an opinion. It is open to interpretation and has been hotly debated. Discussions with DLUHC are soon to end this debate.”

For now, Woking is edging towards uncharted territories of local authority debt.

“The debt is so great that there is no clear solution,” Cllr Roberts said.

“The size of the borrowing and scale of investments is disproportionate. For example, if – and I absolutely stress there are no plans to do this – we raised our proportion of council tax by 10-15%, it would raise roughly £1million to £1.5 million.

“That’s unlikely to help us with Victoria Square debt at £700million-plus.

“It will likely be a new construct to preserve the council. There isn’t a defensible, affordable solution at the moment. 

“If we had no access to further borrowing we could not meet the repayments required to operate. 

“The council is, in broad-brush terms, insolvent.”