Friday, November 22, 2024

Labour-run council loses credit rating after racking up nearly £2bn in debt

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Warrington Borough Council has been stripped of its credit rating by an influential agency after racking up nearly £2bn worth of debts. 

The council, which has been a Labour stronghold for more than a decade, said Moody’s had stopped monitoring its creditworthiness after it failed to provide sufficient information about its finances. 

Moody’s is one of the most prestigious rating agencies in the world and gives independent credit scores to organisations seeking to borrow money from pension funds and insurers. 

Much like consumers hoping to borrow from a bank, a poor credit score makes it more expensive for companies and councils to secure cash. 

Removing Warrington’s credit rating entirely is likely to make it harder for the council to borrow in future because lenders will be increasingly cautious.

Moody’s said it pulled the plug after the council failed to provide five sets of audited accounts stretching back to 2020.

It added that there were “limited prospects” that Warrington would resolve the issue quickly enough to keep its rating. 

The council blamed the problem on an inability to find an auditor to sign off its accounts, as it said the sector as a whole was struggling to secure firms of “sufficient capacity and capability”.

It has been claimed that the council failed to supply key information to its auditor, Grant Thornton, last month, which made it harder to sign off its accounts.

Warrington’s finances have come under intense scrutiny owing to £1.85bn of debts racked up over several years. 

Investments in areas such as property and banking, which councils typically shun, have also raised eyebrows. 

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