Yearly savings of £20 million needed to rectify Slough council's cash woes

Yearly savings of £20 million will be needed over the next five years to rectify Slough Borough Council’s dire financial situation.

Cabinet members met for the first time last night since the local authority issued a section 114 notice banning all non-essential spending earlier this month.

The council’s new chief finance officer, Steven Mair, provided an update on Slough’s financial position for the current financial year.

He revealed that the overspend for the local authority’s revenue budget stood at £6.9 million at the end of May.

This followed a £6.5 million overspend for the 2020/21 financial year.

Mr Mair said: “In round numbers we are working on the assumption that the council will need to deliver around £20 million worth of savings this year, next year and for several years thereafter.

“It’s £16 million approved for this year, £18 million approved for 22/23 and we’ve simply modelled £20 million a year thereafter.

“The council on those figures gets back into a balance in 2026/27.”

He also told councillors that the predicted overspend did not take into account the financial issues which triggered the council’s recent spending ban.

The main issues identified by local authority’s new finance team which led to the section 114 notice includes that the council:

  • has been incorrectly calculating Minimum Revenue Provision since 2016/17, over stating asset lives, incorrectly using capital receipts and omitting some expenditure from the calculation
  • has quadrupled its borrowing from circa £180m to £760m over the same period with a consequential revenue impact
  • has effectively no unallocated general reserves
  • has been incorrectly charging some revenue costs to capital

Council leader James Swindlehurst (Lab, Cippenham Green) told last night’s cabinet meeting: “Clearly the scale of the overspend is alarming not least because Steve’s predecessor had suggested we’d have a £2.4 million underspend to chug into reserves.

“The most basic reason for us having to declare a S114 report was with our reserves wiped out by the significant accountancy adjustments we’d had to make, having an overspend at the end of the year wasn’t exactly possible in terms of our ability to simply massage that away with reserves because they’d already gone.

“The 114 was about getting enough money back in the tin to deal with that as a bare minimum. But also of course looking at wider spending controls to get through the rest of the year.

“The 114 was a very clear message that our financial planning and direction have got significantly out of kilter in terms of the reality of where we are and where we’d hoped to be."

The meeting heard the council is now working on additional savings proposals which will be discussed at the next cabinet meeting in September.

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