Private school does not have funds to pay back Woking Borough Council
Greenfield School in Old Woking was given loans totalling £13.3 million
Last updated 13th Nov 2024
The private school that borrowed millions from Woking Borough Council has approached the bankrupt authority to say it does “not currently have funds” to fully repay its debt.
Greenfield School in Old Woking was given loans totalling £13.3million by Woking Borough Council with £2.4m of these due to mature on November 25.
The council, which has had to cut services and increase tax by 10 per cent to help cover its financial meltdown says it wants Greenfield, which charges up to £17,010 a year, to repay the maturing loans, “however, the school may not be in a position to do this”.
A decision will be taken at the Thursday, November 14, executive committee of Woking Borough Council as to “how best to deal with the amount owed”.
It comes just 11 days before the deadline and less than a month after calls were made for an independent inquiry into the “extraordinary use of taxpayer money”.
The Greenfield School loans have been referred to in the Grant Thornton Public Interest Report published on November 5, 2024 which looked into how Woking Borough Council went bust.
There are also competition issues when a council loans money to individual schools. Furthermore, education is also Surrey County Council responsibility.
“Nevertheless, this is a legacy arrangement and the council has to take the most appropriate action available to it to protect the public interest against the background of the position it has inherited”, council papers read.
Woking Borough Council declared itself bankrupt last year with staggering debts of around £2 billion and a deficit of more than a billion.
The Grant Thornton report revealed it borrowed and borrowed, initially to invest in regeneration projects such as Victoria Square and Sheerwater, but then later to help its loss-making companies repay interest.
Other money was borrowed and then loaned to the private school – with the council at the time arguing lending money to the private sector would free capacity within state schools.
The council is charging Greenfield 1 per cent in interest.
Papers published ahead of the meeting show the school has sold £851,098 in assets and gave this to the council on October 11 – but that still leaves a £1.5m hole.
The papers read: “No payment is required by the school until November 25, 2024 and there has been no confirmation that the payment will not be made.
“However, the school has approached the council advising that they do not currently have funds to make full payment and have discussed re-financing options.”
Options available to the school include the further sales of properties, but according to council documents the “arrangements around this are complicated” and could take take about two years to go through – if at all.
The other option is for the council to take over Greenfield assets itself.
The paper reads: “Neither option is without challenges and risks. If the council takes on the school’s interest in Chertsey Road (the asset in question), it is yet another scheme it will need to manage in order to unlock value.
“If the council agrees to a rescheduling of the loan, it itself results in a delay in the total repayment of the loan. Nor can there be any certainty that (the developers) will come forward with a redevelopment scheme that meets the requirements of the authority as a planning authority.
“At least if this happened, the council could take over the school’s interest in the site, as it could now.
“As the latter option of taking on the property does not fit with the council’s current financial situation or period of review, it is recommended that the £1.5m loan balance is rescheduled.”
Greenfield School was approached for comment.