Slough council will need 'radical action' to get out of financial hole, council hears

Adrian Williams

Adrian Williams
Slough Borough Council reinstates parking enforcement

Slough Borough Council heard on Thursday night that it was time for ‘radical action’ to dig it out of its financial hole.

A Section 114 notice was issued by the council earlier this month – similar to declaring bankruptcy. It faces a £159 million deficit by 2024/25 if drastic action is not taken.

Slough became the third local authority to issue a Section 114, after Northamptonshire County Council in 2018 and Croydon Council last year.

Chief executive of the council Josie Wragg said that the council was previously ‘punching above its weight’ and is now moving quickly to repair the problem ‘with urgency’.

Steven Mair, Slough council’s chief finance officer, outlined a number of actions that would need to be taken to get out of the hole.

He said there would need to be reductions to all services, including statutory services. This could include essential services such as education, social care and bin collection.

Mr Mair said that in reducing these services, the council would have to be ‘very careful’ to protect vulnerable residents.

Though the recommended changes would have a significant impact, Mr Mair said the council had ‘no option’ but to do this.

“The council has to balance its budget – it’s illegal not to do so,” he said. “It is unlawful for the council to spend money it doesn’t have.”

Mr Mair demonstrated to the council that much of the problem has been caused by the level of borrowing Slough council has been doing.

It will have to pay around £30m a year to tackle these costs – around 20 per cent of its budget would have to be allocated to debt charges.

If the council cannot pay back the cost of borrowing, other authorities may refuse to lend to Slough council in the future, Mr Mair said.

Another significant issue is that the council has no allocated reserves. Reserves appear to have been used to balance previous years’ budgets, according to the report.

A further problem is that the council owns several companies with ‘weak’ financial management, which expose the council to ‘significant financial risk’.

Mr Mair said the council will likely have to sell assets to the tune of £200m.

This covers all the ‘non-operational assets’ – those which the council is not currently using.

Staffing issues may also have contributed to the financial crisis.

The report noted that the whole of the finance management team comprises temporary staff and the majority have only been in post since April 2021.

Another finding of the report is that the council paid large sums to external consultants and these ‘will need to be re-considered’.

However, the council heard it was ‘critically important’ that it continues to invest in governance and finances, to avoid future mismanagement.

Mr Mair predicted it would take about four years to turn the council’s finances around – if Slough Borough undertakes all recommended actions.

He stressed that it was important that this was not done ‘in panic mode’ but in a structured and strategic way to prove the council’s financial stability going forward.

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