RBWM's finances: the council administration's view

The Royal Borough administration has strong words to say on the final report from the Chartered Institute of Public Finance and Accountancy (CIPFA) scrutinising its financial situation.

The report laid bare the financial problems and reasons for them – including high social care costs, debt and costs of repayment, historical council tax cuts, and accounting errors.

The Lib Dem-led council blamed previous Tory administrations for mistakes and financial mismanagement leading to this point.

‘Sixteen million pounds worth of mistakes’ has led to council to the verge of bankruptcy, said RBWM leader Councillor Simon Werner.

He and Cllr Lynne Jones, deputy leader and cabinet member for finance, sat down with the Advertiser this week to discuss the bleak final CIPFA report.

The Advertiser also interviewed former leader Andrew Johnson, who has urged that the Lib Dems to move away from 'the blame game' and 'think bigger picture'.

The CIPFA report is set to be discussed tonight (October 30) at a council cabinet meeting.

Accounting errors

The ‘latest shock’ is the discovery of errors in the accounts totalling £16million, said Cllr Werner.

These historic accounting errors, going back to 2021, significantly worsen the council’s financial position.

“Sixteen million pounds of errors in the accounts is shocking,” said Cllr Werner. “It beggars belief. We knew it was bad, but we didn’t realise it was that bad.”

RBWM’s reserves were supposed to be £10million but these were unaudited and RBWM’s finance team ‘had no idea’ if figures were right or not.

Cllr Jones said this goes against ‘basic accountancy 101’ – and the council has been ‘running on fumes’ since 2020.

“Effectively, we were bankrupt three or four years ago,” said Cllr Werner.

“It’s just so tragic – we were on top of it and then the £16million hit and that sent us over the edge.”

Cllr Jones said: “I think [the priority of the previous administration] was ‘Keep going at any cost, and hope something comes out of central Government to help us.’”

The pair believe the former administration ‘misled’ residents and avoided transparency – and that certain actions could have softened the financial blow.

CIPFA also scrutinised the council’s finances in 2020 and concluded that its financial governance needed some work.

Cllr Jones feels the former administration failed to act on this sufficiently.

By contrast, this administration has a ‘very frank’ audit panel, councillors are encouraged to ask questions at cabinet, and the new auditors have ‘a reputation for being tough’.

Council tax

“Cutting council tax year on year was disastrous,” said Cllr Jones. “It was going to blow up at some point.”

Residents ‘enjoyed a nice decade’ when council tax was being cut – but now everyone is paying the price, she said.

A historic cut sets a new lower baseline for council tax revenue. Unlike a one-off budget adjustment, the lower rate applies every year moving forward.

This means the council continues to receive less revenue year after year compared to what it would have if the cut hadn’t been made.

RBWM’s council tax is significantly lower than in other parts of the country.

“In Newbury, they’re paying £600 a year more for a Band D property,” said Cllr Jones.

She has suggested raising the council tax cap – but the council tax cap could be raised 20 per cent and RBWM would still have the lowest council tax outside of London.

Staffing

Gaps in staffing have been ‘horrendous’, said Cllr Jones, and former administrations ‘ran the organisation into the ground.’

The Lib Dems came to discover key capacity gaps at senior level and a ‘salami slicing’ of middle management that started in 2012 or so, she said.

The procurement team had the equivalent of one and a half full-time employees, and the finance team was ‘just decimated’. There was no finance director when the new administration took hold.

These gaps give rise to financial mistakes, including ones of the magnitude RBWM is seeing, Cllr Jones said.

Cllr Werner added that as a result, work in the council is ‘like putting your foot on the accelerator and there’s nothing in the tank.’

“Usually CIPFA says [to a local authority] you have to cut staff. For the first time in history, they’re saying we have recruit staff,” he said.

Contracts and agreements

The leader and deputy leader take a dim view on some of the agreements of the past, including the regeneration contracts.

These were ‘shockingly written’ and made ‘in the interests of developers’, both said.

Moreover, the schedule for money coming in from the Maidenhead Golf Course sale means money is not set to come in until 2030 – ‘too late’, they said.

By contrast, former leader of the council Andrew Johnson still believes RBWM ‘got a reasonable return’ on its agreements.

He said the way forward is to press on and approve the ‘relatively straightforward’ golf course homes planning application, in order to start getting money out of it as soon as possible.

Social care

The council’s specific woes have met the national problem of the rising cost of social care in ‘a perfect storm’.

Such costs have escalated beyond what anyone could have predicted, said Cllr Jones. It is outside RBWM’s control, and many other local authorities are feeling the pinch.

“Care homes are owned by people who want dividends,” said Cllr Jones. “With the demand being what it is, they’re asking for thousands and thousands per week.

Only central Government can change that, she said.

One thing RBWM can do is bring such services in-house – which is why RBWM is looking to set up a children’s home in Windsor, said Cllr Werner.

Moving forward

Despite the deep problems facing the council, Cllr Werner says he is confident the new administration ‘will fix this mess, too.’

The next step is getting Government support – and RBWM has been ‘very clear’ that without it, it will have no choice but to issue a section 114 notice.

But the former leader Mr Johnson has warned that any help from central government may is likely to come with strings attached and urged the Lib Dems to ‘be careful.’