In a surprising twist to Labour’s ambitious devolution agenda, councillors in Surrey have requested the government “write off” a staggering £1 billion in debts amassed by the beleaguered Woking borough council. The plea for a taxpayer-funded bailout comes as Woking faces being absorbed into a larger authority under plans for England’s biggest transfer of regional powers this century.
Woking’s Billion-Pound Burden
Once a poster child for ambitious municipal investments, Woking’s debt-fueled spending spree on skyscrapers, hotels, and shopping centers ultimately led to its financial ruin. Saddled with over £2 billion in liabilities, the council became the largest local government bankruptcy in history when it declared effective insolvency in 2023.
Now, as Labour forges ahead with plans to merge small district and county councils into streamlined “mega authorities”, Woking’s £1 billion albatross risks being passed on to its fiscally healthier neighbors – and their taxpayers. Surrey County Council leader Tim Oliver has called on ministers to “write off those debts” to enable the consolidation to proceed.
Devolution’s Debt Dilemma
The prospect of a central government bailout for an affluent area like Surrey is likely to rankle poorer regions that bore the brunt of austerity cuts. It also threatens to strain relations between Labour’s devolution drive and the Treasury, which is determined to keep a tight rein on public spending.
There’s no point merging Woking with others that would also end up being bankrupt.
– Will Forster, Liberal Democrat MP for Woking
Yet without central government intervention, Woking maintains it can never fully repay its debts, generating a mere £11 million annually in council tax. As councils submit their “mega merger” proposals, an estimated £43 billion in total municipal debts could end up on the Treasury’s books.
Remaking the Local Landscape
Deputy Prime Minister Angela Rayner’s vision of fewer, larger local authorities to streamline services is already sending shockwaves through England’s political landscape. Half of the county councils facing May elections are now expected to seek postponements to accommodate mergers.
Surrey, which submitted its consolidation plan ahead of the government’s deadline, is one of 17 authorities pursuing first-wave mergers. But as councils grapple with the financial baggage of prospective partners, the question of who will foot the bill for past excesses looms large.
Bailout or Bankruptcy?
Labour’s communities minister, Jim McMahon, now faces a dicey decision over Woking’s fate – and whether to establish a precedent of debt forgiveness. Allowing the borough to carry its financial millstone into a merger could destabilize the new authority from the start.
- Rejecting a bailout could scupper the Surrey merger and undermine the nationwide devolution project.
- Approving a write-off risks a cascade of other councils demanding the same treatment, potentially adding billions to the national debt.
As the cost of Woking’s misadventures threatens to ripple across Surrey and beyond, all eyes are on the government to see if it’s prepared to pick up the billion-pound tab for this cautionary tale of municipal ambition gone awry.
