Warrington fails best value inspection triggered by £1.9bn debt concerns
The local authority’s “aggressive commercial programme” has left it in a “precarious” financial position, according to the findings of a government review published today.
Warrington Council has failed a best value inspection, which was announced last year amid concerns from central government about various property investments and business ventures funded by £1.9bn of borrowing.
Read the full best value report
The council, whose property investments include Birchwood Park, BT’s New Bailey office in Salford, and a loan to finance a 40-storey tower in Manchester, will now be the subject of government intervention in the form of Whitehall appointed commissioners.
The best value report found there was “insufficient” expertise and resource within the council for managing a portfolio of investments of such scale.
“We do not believe the depth of member experience and expertise was sufficient to inform their decision making nor to allow them to properly scrutinise decisions that had been made,” the report states.
“By way of contrast a private sector property investment company, with a portfolio of c. £600m, employs 25 staff—far more than Warrington’s resources,” it added.
Scroll down for Warrington Council’s reaction to the report
The inspection described the investment programme as having developed “incrementally and opportunistically [and] is so complex as to be beyond members and many officers’ ability to fully understand”.
The inspection, carried out by Paul Najsarek and supported by Richard Paver and Michael Hainge, also raised concerns about the council’s plans to pay off some of its debt through disposals.
The authority has recently sold an industrial unit in Haydock for £50m and is seeking offers for Birchwood Park – which it acquired for £200m in 2017 – but Najsarek et al said “there are no clear articulation of debt reduction aims, the target size of debt, or the desired investment and risk profile moving forward”.
The report concludes that the council’s members and officers “have a genuine and longstanding commitment to the best interests of residents”.
However, it is the view of the investigators that the authority’s commercial investment strategy has become unsustainable.
“[The] desire to protect along with the preference for the council to have a broad role as a provider and to be directly engaged in all the town’s key institutions has combined with a culture of respect and deference to powerful officers to create the paradoxical situation of a traditional local authority having an unorthodox and high-risk commercial approach.”
Warrington Council statement
The report, following the inspection process, is critical of how the council operates across a number of areas, with particular regard to previous commercial decisions, leadership, governance and strategic financial management.
As a result, while we will retain control of primary decision-making and our services will operate as usual, we expect to be supported by government-appointed envoys to make further improvements. We will remain responsible for leading on this important work, using guidance and support from the envoys, as we implement an improvement and recovery plan.
The government is now welcoming representations on the inspection report and its proposed intervention package, by Thursday 22 May.
We welcome the government proposal to appoint envoys. This is a supportive decision and will help us to deliver the changes needed.
We are very sorry to our residents and communities that we have not been able to provide sufficient evidence to the inspection team through this process, to demonstrate best value in everything we do.
In the immediate term, we would like to reassure you that the outcome of this report won’t have an impact on your ability to access and receive the important day-to-day services that you need and expect. We also have a legal, balanced budget for the 2025/26 financial year with appropriate cost controls in place which are already working, and we do not require any exceptional financial support from government.
We believe we have good foundations to build on at the council. Our workforce is determined and motivated to make a difference, the standards of our day-to-day services are good, and we are proud of our work to support and enhance Warrington’s strong and thriving local economy.
We’re keen to take the opportunity to embed improvements in the areas identified, with the support of the appointed envoys, so that ultimately we can demonstrate that we are a council that is well-governed, has effective leadership, works openly with residents and communities, and uses resources effectively. To this end, it is our utmost priority to demonstrate these improvements to our residents and businesses.
