More than a million pounds in developer payments for community projects has been wiped out in Woking Borough Council’s bankruptcy – although senior officers said money could start filtering back to the wards from February.
On Monday, August 14, the borough’s Overview and Scrutiny Committee met to receive an update on the state of the council’s Community Infrastructure Levy (CIL).
Members heard the money, held by the borough but belonging to the community, was gone as accounts revealed the staggering scale of Woking Borough Council’s £1.2billion deficit and £11 million annual budget shortfall.
The council’s interim chief finance officer, who will be leaving the role tomorrow (August 31), was asked why the money had not been kept in a separate account from the borough’s general fund.
Brendan Arnold said: “The practice nationally, as far as I’m aware in all councils I’ve been associated with, is to keep the sums, as with many others which are part of the reserves and other balances, held on the council’s balance sheet on a separate ledger account.
“So where you see references to CIL being kept in a separate account, it is a separate ledger account within the overall accounting system within the council’s general fund.”
He said the council would continue to do so for accountability, transparency and auditability.
Mr Arnold added the council has had a negative general fund for “many many years even though that wasn’t recognised in management documents”.
On top of that, Mr Arnold told the meeting the council’s deficit of £1.2bn needed to be bridged and that every effort had to be done to close that gap by February 2024 and as such the distribution of CIL had to be paused.
He said the £1.2bn deficit was the “largest charge to any revenue account of its kind in UK local government – and effectively wiped out the value of any cash the council may have had” adding “and that is why the council is in the position of needing to pause the use of CIL.”
He stressed the council would honour its communities through CIL but that it had to deal with its crushing debt before it was able to do so.
“We are not freezing anything,” he told the meeting. “We are not suspending anything, we are simply saying, for the time being, we need to proceed in a measured way and make sure we don’t spend cash we do not have and where we cannot replace it.”
He told the meeting that plans would be revised in February 2024, with funds released for the wards, when the budget was set.
Councillor Liam Lyons (LD, Mount Hermon) said: “As soon as the money exists it will be made available, as soon as we are able to do so, this money will be released.”
The committee chair, Councillor Josh Brown (Con Byfleet and West Byfleet) said there were still a lot of questions regarding the so-called disappearance of the council’s CIL money.
He said: “A lot of people still have a lot of questions. For what it’s worth, one minute we were told the money isn’t there, but by law it’s said it can only be spent on infrastructure, but I don’t believe that’s the case, and we say it’s not suspended and then we also can’t spend it.”
At this point the leader of the council cut in, saying: “There isn’t any money Josh, that’s the problem – there’s no money.”