MOUNTING financial pressures forces Slough Borough Council to declare it has gone bust, banning any new spending.
Today, the Labour-led council has issued a section 114 notice, which effectively means they are declaring themselves bankrupt
This notice indicates that the council does not have enough funds to deliver or balance its budget.
What this effectively means is Slough Borough Council cannot spend any money except on essential and statutory services, such as adult social care and children’s services.
The council has been under government review following two damning audit reports in their 2018/19 accounts by external auditors Grant Thornton LLP, earlier this year.
In their highly critical reports, they found the council had insufficient capacity and skills within the finance department, inadequate preparation of financial statements, inadequate general and earmarked revenue reserves, and inadequate governance, monitoring, and controls over outside groups and companies.
Speaking at a full council meeting in May, Julie Masci, Grant Thornton’s associate director, revealed the council’s general fund reserves had fallen by more than £7.5 million to a mere £500,000 at the end of 2018/19.
The council has also asked the government for a capitalisation directive of up to £15.2 million, effectively giving them greater flexibility to use capital funds in order to fill a £10 million black hole in their finances.
This was caused by two one-off payments, including owning a business in the town millions in business rates since 2010, and absorbing the Slough Children’s Services Trust debt when the council took over the company.
Slough has become the third local authority to issue a section 114 notice, following Northamptonshire County Council in 2018, and Croydon Council last year.
More to follow…