A leaked letter has revealed the Government’s “very serious” concern over Warrington Borough Council’s level of debt, which stood at more than £1.8 billion last March.
Warrington Borough Council says it takes the findings of an external review by CIPFA, The Chartered Institute of Public Finance and Accountancy, “very seriously” and is “working at pace on developing and implementing the recommendations.”
The action has been welcomed by Warrington South MP Andy Carter, who said: “This letter sets the facts out very clearly, it is a really serious situation.
“Debt is almost ten times core spending power, where the average for a similar council is around 1.4 times. Warrington Council’s borrowing makes it a real outlier, carrying significant risk for the town’s finances.
“Labour Councillors have dismissed my concerns and the very reasonable requests from Conservative Councillors for answers on so many issues. They’ve ignored our calls for a change in strategy and even criticised me for raising the matter in Parliament. We now have an independent review by CIPFA saying things need to change.
“Councillors need to take steps to reduce the Authorties’ indebtedness. The borrowing is equivalent of £10,000 for every man woman and child in Warrington and we don’t want a situation developing where the Council can’t afford to meet its obligations, as we’ve seen recently in Birmingham.
“I understand Ministers are continuing to review correspondence from the Council in response to the requests made and I urge Labour Councillors to co-operate fully with officials as they work through the recommendations.”
Warrington South MP Andy Carter outside Warrington town hall
The letter from Lee Rowley MP, Parliamentary Under-Secretary of State for Local Government and Building Safety, was sent to council leader Cllr Russ Bowden last July.
In the letter, Mr Rowley states:…”we have been engaging with the council due to its high levels of debt and extent of commercial activity, on which measures the Council is a significant outlier. As of March 2023, the council’s debt is £1.8b which is 9.9 times the council’s core spending power (CP).
He went on to say it “is the second highest levels of debt for a unitary authority after Thurrock and more than double that of Slough.
“Such levels of debt present significant risks to the Council and public finances.”
It goes on to say that the findings of an external review by CIPFA “are very serious”.
“The Review highlights that your debt fund investments are large, uniquely complex and carry significant inherent risk; that you lack clarity over the purpose of the investments, that the quality and of the scrutiny arrangements is disputed; and, managing such a portfolio would present an exacting challenge to any local authority finance team and leadership. I am concerned that the council does not fully appreciate the level of risk it is exposed to and has not taken adequate measures to mitigate and manage these risks.”
The letter goes on to set out what measures the council should take to “prudently manage the risks” with any decisions of further government action once they have received a response from the council.
A Warrington Borough Council spokesperson said: “We have recently been in discussions with public finance experts CIPFA on behalf of the government about our capital and commercial strategy. We welcomed their expertise and challenge so that we can continue to improve our processes.
“A report provided by CIPFA, which is currently in draft, contains a series of recommendations, which we support and accept.
“We take the findings of this report extremely seriously. We await further discussion with officials and look forward to working at pace on developing and implementing the recommendations. We welcome the final report being completed and published as soon as possible.”
19 Comments
I’m pleased Government have told Bowden and his chums how serious and bad things are
But will they accept the recommendations or just bluff there way out of it as usual ?
We need Government officials to take care of WBC financial affairs until they are at a satisfactory level !
That statement from WBC is pure spin. I can understand the temptation to try and paint things more positively, but I just find it infuriating and insulting to be treated as if I’m thick.
1. “A report provided by CIPFA, which is currently in draft” – yes, it says that in the letter – that it will remain in draft form until the Council have responded
2. ” . . .look forward to working at pace on developing and implementing the recommendations” – the letter and recommendations were received in July. It’s now October. I suppose ‘at pace’ could mean ‘at snail’s pace’ . . . ?
CIPFA should stipulate a time limit for a response.
If it’s not met then Government inspectors should take charge at WBC and implement their recommendations
Respectfully disagree.
I’ve seen what happens when a council is under a Section 114 – it isn’t a good situation.
We do need a firm response from gov’t – the investment portfolio just looks wrong for a town council, and the failed investments we’ve seen don’t inspire confidence – but a kneejerk reaction isn’t helpful.
Jim but the longer it’s allowed to go on we get deeper in debt ?
The amount borrowed is well above 2 billion .
I think Russ and his mates are hoping labour will win the next general election and the piggy bank will break open
I see the government requested a reply from the council with regards to the recommendations in August. It would be reassuring to hear that such a response had been made and that all the points raised in the letter were being addressed.
I wouldn’t hold your breath on that !
It really is about time WBC began to come clean on the true financial state this administration has created. And as you say Jim all the while those at risk are treated as too dense to merit a proper explanation. The amount coming into council coffers never seems to vary as the overall debt level increases. It’s been at £23 million or thereabouts since before the saga of unsigned off accounts was publicised. Throughout a shroud of secrecy has been draped over this administration’s financial dealings.
The problem is posltron WBC had a free range of what they were able to do over the last decade because they had no opposition in the council chambers to hold them to account ! Since the conservative councillors were elected WBC have come under closer scrutiny.
I agree with you it seems abit odd that the financial returns they are receiving from these investments rarely rises above 23 million ?
An in-depth investigation is urgently required
Under our previous and usual local electoral system – with some council wards up for re-election mid term – there would have been an opportunity for voters to express their concern at this administration’s questionable actions. But we were sold (or told?) the full term for all council seats has cost saving advantages. Look what the newly introduced electoral system has cost us. Many more times those supposed savings. Whether the full term full council system was introduced with a view to limiting scrutiny I leave others to judge. But there is little doubt the present system offers little benefit to those all our councillors say they serve the interests of when they are canvassing our votes.
I am convinced that WBC knew what they were doing when they changed the electoral system . It would give them the advantage to push their ideas through without any opposition or resistance.
This has resulted in the massive debt of 2 billion pounds plus we now have .
Never trust the Labour Party again !!!!
Thurrock has issued a 114 Notice in December last year. Didn’t WBC involve or associate themselves with Thurrock financially prior that 114?
Yes according to reports Thurrock invested millions in a solar farm investment on the recommendation of a WBC ‘official’. WBCalso invested in this scheme but got out before the scheme went belly up.
Our debts are getting way out of control but also the government should send extra funding for the hotels that have been shut down for alternative reasons look at the business lost, our NHS staff threatened all too much and over crowding
I see the other local periodical in our town has stopped readers passing comment on this subject at least Warrington worldwide allow us to give our opinion of WBC
Billion? Or million? The letter states 1.8million
1.801 m is £1.8 billion
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