Heavily indebted council has credit rating withdrawn by Moody’s

By Henry Saker-Clark, PA Deputy Business Editor

INFLUENTIAL ratings agency Moody’s has pulled its credit rating on heavily indebted Warrington Borough Council.

Warrington Borough Council told bondholders on Monday that Moody’s withdrew its rating due to “the inability of the council to procure that its statements of accounts are audited by external auditors”.

The Labour-led council has a debt of £1.85 billion and has come under scrutiny for a number of investments.
Last month, the Financial Times reported that the local authority in Cheshire had refused to hand key information to its auditor, Grant Thornton, restricting its ability to review its books.
The Government appointed an inspector in May to investigate whether the council is complying with legal requirements after a review last year criticised its “very large and uniquely complex” set of debt-fuelled investments.
Auditors have only recently finished reviewing Warrington’s accounts for the year ending March 31 2019, meaning it is reporting years behind legal requirements.
The council said it has been unable to complete recent audits “due to challenges which apply across the local government sector as a whole in securing auditors of sufficient capacity and capability”.
It added on Monday that it is seeking to secure an alternative rating from another EU-recognised ratings agency.

Warrington Borough Council has built up its debts amid a raft of investments in a roughly £1.5 billion portfolio, which included now-collapsed energy firm Together Energy.
It has also reportedly provided loans to e-commerce entrepreneur Matthew Moulding to fund a property deal for his THG business.
Its investments also include a number of supermarkets in Greater Manchester and solar farms in York and East Yorkshire.

Commenting on the latest development facing the council’s finances Cllr Rob Tynan, Conservative, said: “The financial situation of Warrington Borough Council just gets from bad to worse.
“Warrington Borough Council is currently a financial outlier with almost £2Bn of borrowings.
“The Council is now subject to a best value inspection by the Government due to concerns of governance and the lack of signed off audited accounts.
“The withdrawal of the rating by Moody’s is just another indicator of the financial predicament of a Council that has borrowed heavily to invest in a string of questionable investments from the Altana relationships to Together Energy.
“We will need to see if the removal of the rating impacts the Council’s already rising cost of borrowing and if it will lead to the Council cutting services to meet these increasing self-inflicted costs.
“This latest instalment just shows that wherever Labour is in control, they run local services into the ground and local taxpayers have to pick up the bill. Labour cannot be trusted to run a Council never mind the Country. Wherever Labour is in power, tax rises and incompetence will follow.”

A Warrington Borough Council spokesperson said: “Warrington is one of only a small number of councils with a credit rating. Like other councils across the country, we have been impacted by the national issue of delays in the signing off of council accounts.
“Moody’s themselves have been clear that the limited prospects towards a timely resolution of the audit backlog across the entire local authority sector means that, in our case, they have insufficient information to maintain the ratings. They have therefore made the decision to withdraw our credit rating.”