FACED with a “critical financial position” and a funding gap of £130m over the next four years, Warrington Borough Council is pressing ahead with plans to sell some of its key assets, including Birchwood Park, to tackle its significant debt burden.
The Borough Council has today published its budget plan for the next four years, including a detailed budget for the 2026/27 financial year. The report states that overall, the 2026/27 budget can only be considered robust if Exceptional Financial Support (EFS) is approved. Without EFS, reserves are not adequate to support the budget, and the Council would be required to issue a Section 114 Notice
The Borough Council’s Revenue and Capital Budget and Council Tax 2026/27 and Medium Term Financial Plan sets out a stark assessment of the authority’s financial position and a clear, if challenging, strategy for tackling its significant debt burden. Central to this approach is the active reduction of borrowing and commercial risk through asset rationalisation, including the proposed sale of major investments such as Birchwood Park, alongside tighter treasury management, service transformation and reliance on Exceptional Financial Support (EFS) from Government.
The budget report describes Warrington as being in a “critical financial position”. Years of rising demand for adult and children’s services, sustained inflation, higher interest rates and substantial historic borrowing linked to commercial investments have combined to create a structural deficit. High levels of external debt have resulted in significant financing costs that place ongoing pressure on the revenue budget.
The situation is compounded by six years of unaudited accounts, uncertainty over commercial income, limited reserves, and exposure to market value fluctuations in the Council’s investment portfolio. The Section 151 Officer is clear that without Exceptional Financial Support, the Council would not be able to set a balanced budget for 2026/27 and would face the risk of issuing a Section 114 notice.
A core pillar of the Council’s debt reduction strategy is the managed disposal of commercial assets to generate capital receipts and repay borrowing. The Envoy Review of the commercial and treasury management portfolio concludes that, while historic investments generated income in earlier years, those surpluses have already been absorbed into the revenue budget and no longer provide protection against current risks. In addition, market value reductions mean that holding certain assets continues to expose the Council to volatility and potential losses.
The proposed sale of Birchwood Park is a flagship example of this new direction. As one of the Council’s most significant commercial property holdings, Birchwood Park represents an opportunity to realise a substantial capital receipt. The intention is not simply to dispose of the asset, but to use the proceeds strategically to reduce outstanding Public Works Loan Board (PWLB) debt, lower future interest costs, and improve the Council’s overall balance sheet position. Alongside Birchwood Park, the Council will pursue opportunistic disposals across the commercial property portfolio, particularly where early sale could prevent further deterioration in value or reduce Minimum Revenue Provision (MRP) pressures.
The budget proposals also allocate £2.552 million from identified pressures to enable capital receipts and PWLB discounts from two commercial property sales to be directly applied to debt repayment. This demonstrates a clear link between asset disposal decisions and the Council’s wider debt reduction objectives.
Rebalancing the investment portfolio
Beyond property sales, the Council plans to rebalance its wider investment portfolio to reduce risk and long-term liabilities. This includes exploring the sale of its shareholding in Redwood Bank, undertaking soft market testing for the potential disposal of solar farm assets under Warrington Renewables, and reviewing the strategic case for retaining housing assets held through Incrementum Housing. In each case, the focus is on assessing whether continued ownership supports financial sustainability or whether disposal would allow borrowing to be reduced and revenue risks to be mitigated.
Joint ventures and subsidiaries such as Wire Regeneration are also under review, with an emphasis on exiting arrangements where possible, recovering capital receipts, and ensuring that any retained interests are financially sustainable without ongoing subsidy.
Warrington Own Buses (WOB)
• Revisit and amend the business plan in line with the true cost base, including a review of the affordability of existing fare cap arrangements to achieve financial sustainability of the company,
• Ensure the shareholder agreement clearly defines the obligations of the Council and WOB.
Treasury management and borrowing control
Tackling debt is not limited to asset sales. The Capital Strategy and Treasury Management Strategy outline a much tighter approach to future borrowing. The Council has committed to keeping new prudential borrowing under strict control, prioritising statutory obligations and essential infrastructure over discretionary investment. Non-standard treasury counterparties will be removed, governance and reporting strengthened, and an independent review commissioned to ensure that MRP, impairment and IFRS9 requirements are being applied robustly.
If Exceptional Financial Support is granted, the Council will also compare the benefits of repaying PWLB debt early against refinancing options, with the aim of minimising long-term financing costs. Improved cashflow forecasting over the Medium Term Financial Plan period will further support more disciplined debt management.
The role of Exceptional Financial Support
While the Council’s plans to sell assets and tighten treasury controls are significant, the budget report is clear that these measures alone are not sufficient in the short term. Exceptional Financial Support is essential to stabilise the revenue impacts of past borrowing decisions and to provide the breathing space needed to implement asset disposals in a phased and orderly way. A rushed approach could crystallise unnecessary capital losses, undermining the very objective of debt reduction.
The Borough Council’s approach to tackling debt in its 2026/27 budget marks a decisive shift away from reliance on commercial investment and towards balance sheet repair. Through the sale of major assets such as Birchwood Park, targeted disposal of higher-risk investments, stricter treasury management and controlled borrowing, the Council aims to reduce its debt burden and long-term financing costs. However, the success of this strategy depends heavily on Exceptional Financial Support, strong governance, and sustained discipline over the coming years. Together, these measures form a difficult but necessary pathway toward restoring financial sustainability.
It follows a revised budget gap of £130 million over the next four years compared to a £90 million gap reported in December. This new budget projection is largely due to potential impacts of the Council’s commercial portfolio and six years of unaudited accounts
While the commercial portfolio has generated £166 million since 2009, the commercial approach has failed, due to exposing the Council to too much risk, and the portfolio’s value has declined by an estimated £275 million.
The council issued a statement today stating:
– “There will be no ‘fire sale’ of assets” and with Envoy support, the portfolio will be managed in a measured way
-The Council is also awaiting the outcome of its application for Exceptional Financial Support (EFS), with clarity expected in late February
-Around £40 million of savings have been identified so far. A comprehensive transformation programme will support further savings while completely redefining how the Council operates
-The Council’s budget plan will go to Scrutiny Committee on 16 February, Cabinet on 18 February, and budget-setting Full Council on 2 March 2026
The budget report sets out its financial outlook for the next four years and, for the first time, shows in one place the full budget gap to 2029/30. The report published today also contains an appendix, which is a report from the Ministerial Envoys about the Council’s commercial portfolio.
While in December 2025 the Council reported a projected £90 million gap, two other key factors have been analysed in detail which have added more pressure to the budget. These two additional items are the Council’s commercial programme, and the fact that it has six years of unaudited accounts.
The initial £90 million budget gap reported in December 2025 has therefore been revised to £130 million, largely due to the impact of these two local issues.
Cabinet member for finance, Cllr Denis Matthews, explained: “The reports published today detail that our difficulties stem from inadequate budget control, an over-ambitious commercial approach, and several years of unaudited accounts.
“We are victim to national issues, such as rising demands and costs for some services, particularly services that support our young people, families and older adults.
“But specific local issues have also played a significant role in driving our budget issues.
“In recent years, instead of making difficult service cuts when many other councils did, we have relied heavily on income generated from our commercial activity. And, while our commercial portfolio has provided a surplus of around £166 million since 2009, all of this money has been used towards covering successive budget gaps.
“It is clear now that the commercial approach did not provide the level of sustainable returns anticipated and has instead left us with significant risks and costs. We borrowed too much, and we took on too much risk – to the point where it is now clear that our overall commercial approach has failed. The value of our portfolio has declined significantly, with a potential liability of around £275 million. We are developing a plan to assess the future of each of our commercial assets. However, there will be no ‘fire sale’ of our assets, and we will manage the next steps in a measured way, with the support of our Ministerial Envoys.
“Equally, while audit delays exist across the local government sector, in Warrington we have a six-year backlog, which is highly unusual and is linked to the complexity of our commercial portfolio. We have a plan to resolve this, but risks arising from any recommendations from these audits, mean we must factor further pressure into the budget.”
Other pressures on the budget
The Council’s revised £130 million budget gap is based on some other contributing factors. This includes demand on adult social care services, the costs of paying back EFS subject to agreement, and a level of contingency to support the delivery of identified savings. A further pressure is due to impacts of the local government finance settlement, which provides the Council with around £6 million less funding over the settlement period.
The outcome of the Council’s application for EFS is expected in late February. An EFS agreement could include a Council Tax increase above the 5% limit. The outcome of seeking EFS will be shared by the Council when known.
Cllr Matthews added: “With the support of our Ministerial Envoys, we will maintain a clear and consistent understanding of the scale of the financial challenge facing the Council in the coming years. We have identified £40 million of savings so far, agreed our improvement and recovery plan, and are now focused on developing our transformation programme.
“The transformation programme will support us to fundamentally change how the Council operates, help us to close the remaining budget gap, ensure we prioritise the services that support the best outcomes for our residents, and enable us to work alongside our communities in new ways.”
The Council’s budget plan will go to Scrutiny Committee on 16 February, Cabinet on 18 February, and budget-setting Full Council on 2 March 2026.
The full report can be read HERE.
