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.”