Warrington Council Confirms £275m Commercial Property Liability Amid Budget Crisis
Warrington Borough Council has issued a stark warning regarding its financial position, revealing a potential liability of approximately £275 million tied to its commercial property portfolio. The Labour-run authority published its comprehensive budget plan for the next four years, which includes a detailed framework for the 2026-27 financial period. This disclosure comes as the council confronts a significantly revised budget shortfall, now estimated at £130 million.
Revised Budget Gap and Commercial Portfolio Decline
The council's budget report, released today, outlines the financial outlook through to 2029-30 and incorporates an appendix from ministerial envoys focusing on the commercial portfolio. Initially, in December 2025, the council projected a £90 million gap. However, this figure has been adjusted upward to £130 million, primarily due to two critical local issues: the council's commercial programme and a six-year backlog of unaudited accounts.
Councillor Denis Matthews, the cabinet member for finance, stated: "The reports published today detail that our difficulties stem from inadequate budget control, an over-ambitious commercial approach, and several years of unaudited accounts." He emphasised that while national pressures like rising service demands have contributed, specific local factors have played a significant role in exacerbating the budget issues.
Admission of Over-Borrowing and Risk
Cllr Matthews candidly admitted: "We borrowed too much, and we took on too much risk – to the point where it is now clear that our overall commercial approach has failed." He explained that in recent years, the council relied heavily on income from commercial activities to avoid service cuts, generating a surplus of around £166 million since 2009. However, all of this money was used to cover successive budget gaps, and the commercial strategy did not yield the sustainable returns anticipated.
The value of the council's portfolio has declined substantially, leading to the £275 million liability. Cllr Matthews assured that there will be no 'fire sale' of assets, with the council developing a measured plan to assess each commercial asset's future, supported by ministerial envoys.
Additional Financial Pressures
The revised £130 million budget gap is influenced by several other factors:
- Increased demand for adult social care services.
- Costs associated with repaying exceptional financial support (EFS), pending agreement.
- A contingency fund to support identified savings.
- A reduction of around £6 million in funding from the local government finance settlement over the period.
The outcome of the council's EFS application is expected in late February, which could permit a council tax increase above the 5% limit. The council has committed to sharing this result once known.
Path Forward and Transformation Programme
Cllr Matthews highlighted the council's efforts to address the crisis: "With the support of our ministerial envoys, we will maintain a clear and consistent understanding of the scale of the financial challenge." The council has identified £40 million in savings so far and agreed on an improvement and recovery plan. A transformation programme is being developed to fundamentally change how the council operates, close the remaining budget gap, and prioritise services that deliver the best outcomes for residents.
The budget plan will proceed through scrutiny committee on February 16, cabinet on February 18, and budget-setting full council on March 2.
