Will Guildford Borough Council, ‘Your Waverley’s partner, go belly-up?
Whatever the future holds – the present isn’t pretty.
Like most local authorities, Guildford Borough Council (GBC) has been significantly affected by inflation, interest rates and the general state of the economy at a time when the demand for its services is increasing.
This should be of huge concern to Waverley residents as GBC strives to avoid becoming the subject of a government control order. A massive concern too for Waverley/Guildford chief executive Tom Horwood, head honcho of both councils.
The Waverley Web wants to be positive. However, even a cursory look at income and declining real-term Government cash plus inflation on debt payments against general outgoings and long-term commitments, the holes in the finances are untenable without massive cuts.
Going bankrupt may be an easier option. Some believe it is better to do it now at the start of an administration than later.
WW predicts the public will suffer with the closure of borough facilities and services in both Waverley & Guildford.
Guildford councillors heard their Council has been hit harder than many because of overambitious actions by others in the past.
Overall debt stands at £300m, whereas the deficit in other Surrey councils ranges from nil in Reigate to £1.9bn in Woking, with Surrey as a whole showing debt as £5.5bn. ( in some quarters, it is thought the debt level is even higher.) The cost of servicing this debt is growing as interest rates increase.
Tomorrow GBC councillors will meet to discuss how to retain control. A detailed report has been prepared for them, making it grim reading. This article attempts to summarise the key elements of the report and the problems that have contributed to this situation.
As recently as February this year, the Council approved a budget for 23/24 showing a deficit of £18.3m to be underwritten by nearly £36m of reserves. However, a much delayed-reasons not explained-external audit of the 20/21 accounts in April 2023 revealed accounting errors which reduced the £36m to £12m-a massive reduction due mainly to the incorrect treatment of Covid related grants-meaning that without urgent action, Government intervention was inevitable.
With external assistance, the Council immediately appointed a task force to identify the reasons for this situation and recommend ways forward to avoid, or at least delay, external intervention.
The task force revealed a whole catalogue of errors-payroll errors cost £1.9m. In addition, the following contributed to a greater or lesser degree-lack of financial oversight; poor accounting checks; IT project failures; capital over commitment; poor project management; reduced investment returns; inexperienced finance staff; lack of external financial oversight; staff savings not met; failed reorganisation initiatives.
WW wonders how the former incumbent Chief Executive and Chief Financial Officer, together with the Council leadership, could ever have allowed this situation to develop. So serious management failure needs to be added to the list.
However, one bright spot was identified: the merger at the senior management level with Waverley, which is achieving the savings envisaged probably because of changes at the top.
Having recognised past problems, how can this help to resolve the problems of today and the immediate future remains to be seen.
Tight financial controls on all potential expenditure-capital, revenue, and staff will be introduced immediately, and reviews of all budgets and the outcome of these initiatives will be reviewed in October. It is believed these should produce revised budgets for 23/24 and potentially for 24/25, which, supported by reserve balances and interest savings from asset sales, will buy the Council time to get its finances in better order for the longer term.
Recently, the Council has concentrated on achieving results from longer-term investments whilst ignoring the need for short-term financial stability. Consideration will also be given to areas, particularly in finance, where the Council lacks the relevant skills to achieve all required.
Many business outsiders find it difficult to understand why much of what is now proposed was not in place already. Councils are businesses that need to be properly managed.
The October review will then formally consider the way forward. If the essential finance base cannot be established, the case for Government intervention will be difficult to avoid. GBC obviously hopes this will not be the case and will use its best endeavours to achieve the desired outcome.
Many will be asking whether collaboration with Guildford was necessary. Waverley Tories will, no doubt, be chortling with glee. But Waverley was never capable in this modern climate of holding its own. It had to make savings; if it hadn’t, Guildford would be in an even worse position.
What about Surrey County Council?
Meanwhile, Surrey County Councils’ black hole gets deeper. It, too, needs investment to pay its debt interest. Oddly nobody wants to offer that when the reality of Blightwells in Farnham is fully realised!
If Surrey County Council goes belly up, most bus services will too. Most are subsidised. Many in the rural villages consider their futures as anyone reliant on public transport will have no choice but to do.
Political gerrymandering and amateur empire-building at Tory-controlled Surrey have led to this mess.
So who really pays?
That will be Surrey’s elderly, disabled, young and old clobbered with no transport, closure of services and physical infrastructure collapse.
It is no surprise to us here at the WW that Surrey residents have endured crippling administrative mismanagement on a monumental scale and paid millions to consultants who, seeing the opportunity, have emptied the money pot. However, it was a bit of a surprise that the malaise was closer to home. First, it was Woking, now Guildford; who next?
Many will be asking if a collaboration with Guildford was necessary. Waverley Tories will, no doubt, be chortling with glee. But Waverley was never capable in this modern climate of holding its own. It had to make savings; if it hadn’t, Guildford and Waverley would be in an even worse position.
A very sad tale of operating outside the zone of competence the Government must better monitor the transparency and auditing prudence within local authorities. Perhaps there are insufficient councillors with the project and financial management experience required to scrutinise and audit local government management systems and processes with the necessary precision?