Ministers have agreed to give bankrupt Woking council a £500m taxpayer bailout, described as an “unprecedented” intervention, as part of a plan to merge a dozen local authorities in Surrey into two new unitary councils. The communities secretary, Steve Reed, announced the government would repay a significant chunk of the debt owed by the former Tory-run authority, which declared effective bankruptcy two years ago after its leadership borrowed heavily for risky investments that failed.
The bailout smooths the way for the creation of two new councils: West Surrey, merging Woking with Guildford, Runnymede, Spelthorne, Surrey Heath and Waverley; and East Surrey, combining Elmbridge, Epsom and Ewell, Mole Valley, Reigate and Banstead, and Tandridge with the county council. The reorganisation is part of Labour’s “devolution revolution”, the biggest local government shake-up in England since the 1970s, aimed at efficiency savings and economic growth.
Woking’s debt, now exceeding £2bn, is one of the largest financial failures in local government history. The Guardian had earlier revealed that ministers were asked to write off £1bn in debt to enable a merger. Reed said the support was necessary because the debt “cannot be managed locally” even after asset disposals and normal grant funding. He hinted further help might be needed if Woking cannot raise enough from asset sales.
Ann-Marie Barker, the Liberal Democrat leader of Woking council, called the bailout “extremely positive news”, adding that it gives the new unitary authority the best chance of success. Local government minister Alison McGovern said the reorganisation would replace “countless confusing councils and fragmented services” with better jobs and public services. The government plans to extend similar mergers to dozens more areas across England.
