Warrington council’s inability to find an auditor to sign off its accounts has led the credit rating agency Moody’s to withdraw its monitoring of the authority, amid mounting concern about the broader crisis in local government funding.
In a statement, Warrington borough council said Moody’s Investors Service was no longer providing it with a credit rating, a crucial metric used by potential lenders to assess a borrower’s creditworthiness.
The local authority, one of many struggling with the impact of years of funding cuts from the Conservative government, has £1.8bn of debts and has faced scrutiny over a “high-risk” investment strategy it pursued to raise cash.
On Monday, the council said it had been unable to provide Moody’s with assurances its accounts had been approved by external auditors. It blamed “challenges which apply across the local government sector as a whole in securing auditors of sufficient capacity and capability”.
The council is now seeking a rating from another agency for £150m of bonds that mature in 2055, and says it remains compliant with the terms of these bonds.
Like many UK councils, Warrington has ploughed cash into commercial schemes in the hope of generating returns. These included a stake in Together Energy, which fell into administration in 2022, and a £200m loan facility to Matthew Moulding, the billionaire owner of the Hut Group.
In May, the heavily indebted council refused to hand crucial information to the auditing firm Grant Thornton, restricting its ability to scrutinise the books.
Earlier that month, the government appointed an inspector to undertake an independent investigation to determine whether the authority was meeting its best value duty, an obligation to improve the way it functions.
The chief executive of the council, Steven Broomhead, insisted earlier in June that the £1.8bn of debt was actually an investment.
He said: “A lot of what we’ve done in Warrington has been what I call ‘civic entrepreneurism’. We’ve been very commercial in the way we’ve operated.
“We’ve been so commercial that we’ve attracted the attention of government, who are carrying out a best value inspection in what we’ve been doing.
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“We haven’t been borrowing money to invest for a return. We’ve been borrowing money for regeneration. What the hell is wrong with that?”
A string of councils have reported financial difficulties in recent years, forcing deep cuts to essential local services.
Andy Haldane, the chair of the government’s levelling up advisory council and former chief economist of the Bank of England, singled out austerity measures imposed by successive Tory governments as the “root cause” earlier this year.
Increasing numbers of councils in England are warning they in effect face bankruptcy. Despite ministers taking evasive action with an extra £600m to top up funding plans for next year, MPs and council leaders from across the political divide say local authorities are still £4bn short in an “out of control” financial crisis.