WARRINGTON Borough Council’s £1.6b “risky” investments in capital projects could be under review by the Government after Warrington South MP Andy Carter called for an urgent inquiry into excessive council borrowing.
In a House of Commons debate today (17/12/20) on Local Government Finance the Conservative MP for Warrington South urged the Secretary of State for Communities Robert Jenrick MP, to hold an inquiry into Council borrowing and investment strategies.
It comes as Croydon Council in London recently declared itself “bankrupt” by issuing a Section 114 notice due to its “severe and ongoing” financial difficulties, including owing around £1.5 billion.
The MP for Warrington South has serious concerns that Warrington Borough Council could be next and that the Labor-run Council has taken what could have been a sensible investment strategy and allowed it rocket out of control, with reckless borrowing of more than £1.6billion on projects that fall outside of the Town.
Mr Carter said: “I’m not against a sensible level of borrowing to fund some investments and to build new facilities for local residents like leisure centres – but Warrington Labour have taken their borrowing to a whole new level within excess of £1.6bn debt and I’m seriously concerned that the Council could shortly be following the same fate as Croydon.
“Warrington South Residents and local stakeholders deserve a level of transparency; they want to know that there is effective governance and effective oversight over decision making but accounts still haven’t been signed off back to 2017/18. The consequences as we’ve seen in London and Nottingham can be very serious.
“Careful Financial management is always going to be a part of life for councils, the Government has provided funding additional support in recent months to cover Covid costs. I’m deeply concerned that Warrington Labour simply doesn’t understand when enough is enough, if their risky investments fail, the debt will ultimately fall onto the shoulders of council taxpayers.
“That’s why I’m calling for an urgent inquiry so we can put a stop to unrestricted spending and make local councils more accountable to the people.”
Responding in the House, saying he may look into the financial affairs at Warrington after his statement, Secretary of State RT Hon Robert Jenrick MP said: “We all want to see Councils have access to funding at low-interest rates to fund housing and regeneration within their own boundaries, we do not expect local Council’s to be indulging in risky financial ventures, either within their own area or beyond, that is a mistake, and many local Council’s quite clearly do not have the financial management skills to do that.
The Minister went onto say that the Government needs to: “bare down on Councils that are using taxpayer’s money as if it were monopoly money and to respect the individuals who are actually paying the bills at the end of the day.”
Mr Carter has also welcomed news of a review of the effectiveness of Local Authority External Audits announced today, particularly given accounts dating back to 2017/18 are still to be signed off, despite constant promises by the Council Leader that they would be presented to the Council.
Deputy leader of the council Cllr Cathy Mitchell responded: ““We all value our public services, especially for the most vulnerable people – children at risk and people in need of help with care. The council spends 80p in the £1 on caring for people. The Conservative government has chosen austerity, which has slashed council budgets by 60p in the £1 since 2010.
“Our investments add -net (after all costs taken out) – £20m every year to our income. Without them, we would have to find £20m worth of cuts to services every year – would Mr Carter make the cuts to Childrens’ Services or in Adult Social Care?
“We are extremely careful about the investments we make. We take advice from external experts at all stages and actively manage investments after that. The vast majority of our investments has been on bricks and mortar, rented out to good companies on long leases, which provides an income. The value of our assets has grown significantly during the crisis and most have not been negatively impacted by COVID. We could sell all of our investments and pay off the debt, but we couldn’t use the money we would raise to fund services – Andy Carter really should understand that. So we would have no debt but a £20m hole in our budget on top of the other cuts we have to make.
“I would ask Andy Carter MP, again, to please do his job and push for a better funding settlement from government for Warrington, one of the most poorly funded councils in the country. I’m always happy to have a (socially distanced) discussion with Mr Carter but so far he hasn’t taken me up on it.”
4 Comments
Well done Andy Carter for highlighting the financial mismanagement of WBC. Let’s hope the government investigation holds the guilty parties to account
It’s about time these dodgy councillors were looked at . They just seem to be a law unto themselves and do as they please with planning etc . They only seem to be interested in trying to make money regardless of the impact to communities and the lives of Warrington residents . The proposed link road is a prime example of not giving a toss . Nothing to do with congestion but all about filling coffers. I wonder how many councillors actually live in the areas their dodgy planning affects
Indeed, and how many will be here in the near future to live amongst their carnage. They have to stop and won’t listen to the towns council tax payers, someone has to intervene.
The situation in Warrington is extremely worrying.
It isn’t merely the scale of investments. It isn’t just that some of them look, frankly, dodgy – Redwood Bank being a case in point. It’s the council’s utter secrecy about the investments which alarms me. Whenever somebody refuses to answer a question it just makes me want to ask them more questions!
I really do worry that we’re headed for a Section 114 like Croydon.
Doubtless there will be people saying that Andy Carter should ask his own Party some hard questions, and I’d agree – billions spent without proper procurement processes is a matter for the police, I’d suggest. That doesn’t mean that Andy Carter shouldn’t also challenge WBC. They are WAY overdue a serious Q & A session.