Slough Council will sell £600m-worth of assets to plug financial hole

SLOUGH Council will have to sell half of its properties valued at £1.2b to bail themselves out of debt, papers reveal.

A report called the ‘debt repayment/asset disposal strategy’ is due to be presented to senior councillors at a cabinet meeting on Monday, September 20.

In it, it lays out how the council will have to sell up to £600 million-worth of assets over the next five years to reduce its financial pressures and reduce some of its borrowing debt of £760m to about £335m by 2027.

This is to make borrowing “more manageable” and in line with other local authorities.

 

Sloughs total borrowing from 2011

Slough’s total borrowing from 2011

 

READ MORE: Slough Council could ‘downsize’ services and staffing

It follows the council issuing a section 114 in July, which temporarily froze all non-essential spending, when financial officer Steven Mair said the council faced a deficit of £174m and was expected to rise further as his team got to grips with the authority’s finances following historic accounting errors uncovered by a damning audit.

The council plans to sell up to £200m-worth of assets within the first two years to finance capitalisation directions, which allows an authority to fund revenue from capital including borrowing, received from government while a further £200m to £400m will repay its debt.

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Originally, the council asked for a capitalisation directive from government of £15.2m in its budget earlier this year but that has sharply risen to £200m, which is nearly 13 times higher than the previous request.

To compare, Croydon Council, which also issued a section 114 last year, asked for a capitalisation direction of £70m to pay off its financial pressures.

 

Other local authorities have requested a capitalisation direction

Other local authorities have requested a capitalisation direction

 

According to the report, Slough Borough Council owns about 6,700 property assets, including land and buildings, with a total value of £1.2b.

Council officers recommend cabinet members approve option two for the local authority to seek to bring in “external specialists” to deal with the operational aspects of disposing of the assets. The report does not lay out how much this will cost.

Another way the council is eyeing to reduce its financial pressures is to ‘downsize’ by stripping services and staff to provide the statutory minimum.

Slough Observer | News