Woking Borough Council has warned that it is ‘in the territory’ of effective bankruptcy as it struggles with over £2bn of debt.

The local authority has published its financial plans, which will be decided on by an Extraordinary Council meeting tomorrow, setting out how it plans to balance its budget in 2023/24.

The council says it will find efficiencies and implement cost savings, and will use £8.3m in financial reserves. It will also increase council tax by 3%.

However, the council, which is currently subject to a Government review of its finances, has also said that it is not evident how it will deliver a balanced budget for 2024/25.

Woking Borough Council has about £2.4bn of debt due to £1.8bn in loans, including £700m for its Victoria Square development, and inflationary pressures.

This has led to the council warning it might have to issue a Section 114, which would mean a halt to all non-statutory spending.

A report for the Extraordinary Council meeting said: ‘The council is in the territory of S114 but as of the date of this report a S114 Notice is not required. This report however may lead to the issuing of a S114 Notice in 2023/24 as work on the 2024/25 budget progresses.’

Cllr Ann-Marie Barker, leader of Woking Borough Council, said: ‘Since my administration gained control of Woking Borough Council, getting its finances under control and presenting a balanced budget for 2023/24 has been our priority.

‘Achieving this has meant taking a responsible, affordable, and most importantly, a sustainable approach to the Council’s finances.’

Cllr Barker continued: ‘Despite the setting of a balanced budget, the Council’s medium and long-term financial position remain critical.

‘It remains unclear how the Council will establish future balanced budgets without making difficult decisions around the continued delivery of some services. Further cost savings are inevitable to reduce the unsustainable reliance on the Council’s financial reserves.’

Speaking ahead of Thursday’s meeting, Cllr Dale Roberts, portfolio holder for Economic Development and Finance, said: ‘Let me be clear. We face a mountain of unsustainable debt, together with an uncertain and challenging future. It will require painful decisions about which services we can deliver.’