Woking council faces potential £1 billion loss from government investigation into debt-fueled investments

Woking council in Surrey, England is facing a potential financial hit of £1 billion due to a government investigation into its debt-fueled investment spree in hotels and skyscrapers.

The council's assets, including a trio of skyscrapers and a new Hilton hotel, may be marked down to reflect a significantly lower value than previously anticipated.

The biggest element of the write-down is the council's Victoria Square project, which is estimated to have a paper loss worth up to £550 million.

The council has committed about £750 million of borrowing to the project, but it is now thought to be worth closer to £200 million.

The government has installed three external commissioners to investigate the council's financial position and has warned that it faces "the most challenging financial position of any local authority in England." Woking council is the most indebted council relative to its size, with a notional debt of £19,000 a head for each of its residents.

If the council's assets are written down, it could impact national government finances and become a Treasury issue.

The Lib Dems took control of the council in May 2022, and the bulk of the commercial investments were made between 2016 and 2019.

The council is considering issuing a section 114 notice, which signals insolvency.