SLOUGH’S crumbling finances could result in a £159 million black hole by 2025 if further government support is not granted.
On Friday, July 2, the council announced they will be issuing a section 114 notice, effectively declaring bankruptcy and banning all non-essential spending until July 22 at the earliest.
Steven Mair, the council’s chief new finance officer, revealed in the section 114 notice the council could face a £159 million black hole by March 31, 2025, unless further government support is provided.
A review of the local authority’s finances is already underway by the government after Slough Borough Council requested an up to £15.2 million capitalisation directive so they can sell some of their assets to plug this year’s gap – which was originally £10 million thanks to two one-off payments.
But Mr Mair now says the council could see an estimated £96 million by the end of this financial year – and the budget approved in March 2021 will not be balanced and deliverable.
This number has spiralled due to a “growing number of significant issues” found, and the council will need additional support from government.
He wrote: “At this stage there are no straightforward remedies. There are no ways out of this financial situation other than seeking additional support from Ministry of Housing, Communities, and Local Government and a willingness on the part of the council to take the decisions that will be required to achieve a balanced outturn in 2021/22 and to set a lawful budget in 2022/23.
“This process must be performed with pace and the decisions taken must be implemented.”
This could involve seeking a further capitalisation directive and selling more of their assets.
Mr Mair also said spending controls will need to be set in place for the remainder of the year, and if the finances are not yet resolved, further section 114 notices will need to be issued.
The council has made a number of purchases, such as an Odeon Cinema in Basingstoke, a Waitrose supermarket in Gosport, and two hotels in the town in a joint venture with Marriott.
Josie Wragg, chief executive of the council, said: “That way [capitalisation directive] we minimise the impact on service delivery.
“Now, there’s no getting away from the fact that we will still need to be making some realignment to services and reducing some services as part of the process – but we will, going forward, be working with our colleagues and our members, and we will be taking view to residents.”
However, she could not reveal what assets are in danger of being sold off.
Councillor James Swindlehurst, leader of the council, said: “The process of repairing council finances continues and our commitment to the provision of essential services remains unchanged: bins will still be collected, potholes still filled, care still provided to our most vulnerable.
“We have had a team forensically scouring our financial statements and processes. To back up the commitment to better financial management, at the May council meeting, I took on the portfolio as part of cabinet and involved all the lead members in discussions to secure our financial future.
“Some of the issues being found go back several years, but this cabinet, appointed in May, will make the decisions required and put the council on a sustainable footing.
“The journey we have been undertaking with the transformation and restructure has helped us identify priorities for our communities and concentrate on what is required for Slough residents, businesses and the town as a whole.
“We will continue to engage all residents and other stakeholders in the ongoing improvements to our council finances.”
In a review of the council’s finances, Mr Mair’s new finance team also found borrowing has quadrupled over the years from £180 million to a whopping £760 million.
They also found historic accounting errors, no unallocated general reserves, the council incorrectly calculating the amount charged to their revenue account to finance capital expenditure in 2016 – 17, no close monitoring on spending on major transformation projects, and council tax income estimations have not been accurate.
The Labour-run local authority approved to increase council tax by 4.99 per cent for this financial year and were expecting over £60 million in council tax revenue.