Three Surrey councils have combined debt of over £3.5 billion
Woking, Spelthorne and Runnymede have ranked top five in the country for having the most debt
Last updated 16th Jan 2024
There are worries for Surrey councils this morning - as its revealed three have been named as having the top 5 largest debts per population in the country.
Both Woking and Spelthorne owe over 1 billion, with Runnymede following close behind with upwards of 600 million in debt.
Debt breakdown:
Woking:
- Total debt - £1,948,583,000
- Debt divided by population - £18,756
Spelthorne:
- Total debt - £1,072,698,000
- Debt divided by population - £10,415
Runnymede:
- Total debt - £637,900,000
- Debt divided by population - £7,270
A spokesperson from Woking Borough Council said:
“Woking Borough Council is subject to government intervention because of its high levels of debt, which at £2billion is unsustainable. An Improvement and Recovery Plan, approved by Commissioners, is publicly available. This plan includes the development of a financial recovery and debt reduction plan, funded by asset disposal that aims to achieve best value for the public purse by maximising asset values and avoiding further costs.
“The Chief Executive, with the support of the S151 Officer, has requested that its new incoming auditor for the 2023/24 financial year, Grant Thornton LLP, 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.”
A spokesperson from Spelthorne Borough Council said:
What are the aims and priorities of the council’s investment portfolio?
The Council acquired investment assets during the period 2016-18 to generate long-term sustainable income streams to offset the impact of government grant support having been removed, to enable the Council to support the delivery of services for its residents.
How does the council oversee the acquisition and disposal of property?
For example, is there a members-led Strategy and Governance Committee or equivalent, which reviews the portfolio? What are the key indicators to manage performance of the portfolio? As stated above the Council stopped acquiring investment assets in 2018. The Council has put in place a Development Sub-Committee which has oversight of investment assets and reviews. The Development Sub-Committee reports in turn to the Corporate Resources Committee. There is also an informal Assets Portfolio Working Group which meets fortnightly and provides senior councillors with updates on investment assets issues.
What was the net income returned from the investment portfolio in 2020-21, 2021-22 and 2022-23?
After paying down part of the debt each year, paying the interest, paying management costs and setting aside part of the rental income to build up a “rainy day” fund to be available to cover dips in the rental income when there is turnover of tenants, the net income each year has been £10m.
What is the forecast return from property investments in 2023-24?
Net £10m towards support of services.
Has the financial officer issued, or has warned of issuing an S114 notice over the course of the financial year?
No
Has the council ever carried out an external audit of its investment portfolio?
We have periodically invited external experts to critically review our portfolio.
Has the council faced an external audit by auditors instructed by the Department for Levelling Up, Government and Communities?
No
If the council is unable to answer the above, will the council provide a statement about its debt levels to help provide context? For example, does the council believe the current level of debt is sustainable? Is there a strategy to reduce debt over the short or long-term?
Yes debt is sustainable as income generated by the assets associated with the debt comfortably exceeds the financing cost of the debt which is steadily being paid down on a year-by-year basis.
A spokesperson from Runnymede Borough Council said:
"Much of the reporting to date has focussed on debt, without reference to the income generated and so we welcome the opportunity to show a more complete picture by reporting on income generation. It is also important to highlight that Runnymede is a stock holding council i.e. it has retained its social housing stock and provides social housing for its residents. The total debt of the Council includes a significant multi-million-pound debt provision arising from policy changes outside the control of Runnymede Borough Council.
"Runnymede Borough Council has borrowed to support capital spending plans for a variety of purposes, including investment in its social housing stock, for regeneration schemes which have delivered new housing and leisure activities across the Borough, and to build up a portfolio of commercial property investments from which it derives significant income to support it priorities and aims, as set out in its Corporate Business Plan.
"The Council’s investment portfolio was built up over a number of years, with its last purchase being in March 2020. All acquisitions were subject to rigorous scrutiny by Councillors. Our Capital Strategy no longer includes the acquisition of commercial property purely for investment purposes. The management of our property portfolio is governed under our Asset Management Strategy and continues to have close scrutiny from Councillors, most recently via a newly created cross-party Property and Assets Task Force. Key performance indicators are included in the Council’s quarterly Treasury Management reports to both the Corporate Management Committee and the Overview and Scrutiny Committee. This data is supplemented by benchmarking data from leading market experts.
"Net income from Investment properties after direct costs and borrowing costs (interest and provision for repayment):
2020-21 £10.725m
2021-22 £10.999m
2022-23 £11.182m
Forecast for 2023/24 £11.108m
"The Council has a sound financial plan in place which recognises the risks and challenges facing local government and includes an action plan for the Council’s on-going financial sustainability. The updated Medium-Term Financial Strategy will be considered by Members shortly, followed by the Capital And Investment Strategy, Treasury Management Strategy and detailed budget for 2024/25.
"The Chief Financial Officer has not issued, or warned of issuing, a s114 notice over the course of the financial year.
"The Council draws on considerable external expertise to support the management, benchmarking and reporting of its property portfolio and undertakes external benchmarking of the performance of its property portfolio using a range of specialist experts in determining options for individual assets.
"Like all local authorities we have ongoing dialogue with DLUHC as we do with government departments on a range of issues that impact our residents. In that regard any queries relating to work undertaken by DLUHC should be directed to DLUHC."