Warrington Borough Council’s inability to secure an auditor has led to its credit rating agency withdrawing its services from the council, spotlighting a broader crisis in local government funding.
Moody’s Investors Service have withdrawn its monitoring of the local authority after the council was unable to find an auditor to sign off its accounts. The move means the council will no longer be provided with a credit rating, a crucial metric used by lenders to assess a borrower’s creditworthiness. On Monday, the council said it had been unable to provide Moody’s with assurances its accounts had been approved by external auditors, blaming “challenges which apply across the local government sector as a whole in securing auditors of sufficient capacity and capability”.
The council, burdened with £1.8bn in debt, has faced scrutiny for its high-risk investment strategies aimed at generating revenue. These include investments in Together Energy, which went into administration in 2022, and a £200m loan to Matthew Moulding, owner of the Hut Group. The council is now seeking a new rating for its £150m bonds maturing in 2055.
The council's financial management has attracted government scrutiny, with an inspector appointed to investigate its compliance with best value duties. Warrington's chief executive, Steven Broomhead, had previously defended the council’s debt, describing it as part of a strategy of “civic entrepreneurism” focused on regeneration rather than profit.
In May, Warrington refused to provide crucial information to the auditing firm Grant Thornton, further complicating the auditing process. This followed the government’s appointment of an inspector to evaluate the council's operations.
Amid ongoing financial strains, many UK councils have reported severe fiscal challenges, with some nearing bankruptcy. Despite the government injecting an additional £600m into local funding, experts, including the chair of the government’s levelling up advisory council and former chief economist of the Bank of England Andy Haldane, have attributed the financial crisis to austerity measures from successive Conservative governments, warning of a £4bn shortfall in local authority budgets.
Former MP and Labour candidate for Warrington North Charlotte Nichols told The Warrington Lead: “The next government needs to sort out the local government financing model, so that councils like ours aren't forced into a choice between damaging cuts to local services for our most vulnerable residents and trying to find ways of generating additional revenue.”
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