So there you have it folks – as we revealed on the Waverley Web a few days ago the head honchos at Surrey – wallowing in their own mire – after successive bad investment decisions have found a way out of the mess they, yes they, and the Government have created.
“I’ve got a cunning plan, we can cover up all our unwise investments in places like Blightwell in Farnham – and from Camberley to Cumbria by getting together with our colleagues in Spelthorne.’
Recent years have seen a marked rise in ‘prudential’ borrowing, driven increasingly by local authorities taking advantage of low-interest rates offered by the Public Works Loan Board (PWLB). Local authorities’ PWLB debt has risen from £64 billion in March 2015 to £66 billion in March 2017 and now stands at
£77 billion in March 2019.
Spelthorne’s PWLB borrowing has mainly financed the acquisition of commercial property. The Council argued that it was using fixed low rates of interest to “help offset the impact of disappearing general revenue grant support from the Government”. On its largest investment so far – the £385 million purchase of the BP campus in Sunbury-on-Thames – the independent auditor of its accounts cited a “number of significant weaknesses in the Authority’s arrangements to secure economy, efficiency and effectiveness in its use of resources”.c Since then Spelthorne has made further high-value property purchases – an office block in the City of London and another office development in Nine Elms, Battersea – more than doubling its PWLB borrowing.
Woking Borough Council has also taken on £0.6 billion of PWLB debt since March 2017, financing the acquisition of retail and property sites, with its largest investment so far the new Victoria Square commercial and property development (at an estimated cost of £500 million).
In May 2019 the Public Accounts Committee highlighted concerns that while governance arrangements for the sector as a whole were “generally robust”, some councils have
“audit committees that do not provide sufficient assurance, ineffective internal audit, weak arrangements for the management of risk in local authorities’ commercial investments, and inadequate oversight and scrutiny”.
So while Cllr Oliver is preparing to run up his Unitary Authority flag up the County Towers pole, and preparing his role as the First Mayor of Surrey, next week this report will go to the Cabinet.
PS. You will all be delighted to hear that “final salary” pensions are not affected by reorganisation.