Slough Borough Council bans new spending after Section 114 notice

After months of speculation, Slough Borough Council has been served with a section 114 notice and faces a financial situation of an ‘extremely serious nature’.

The notice has been issued as the borough is in a position where the projected in-year spending is higher than the approved revenue budget and the level of revenue reserves held by the council.

A section 114 means that the council is prohibited from entering any new agreements for any expenditure until at least July 22 unless there is explicit written consent from the section 151 officer.

Josie Wragg, chief executive said: “Residents should be reassured this notice does not mean any immediate change to services; we will still be collecting your bins next week, safeguarding the most vulnerable in our town, maintaining the roads and supporting schools, to list just some of the services we know are important to you.

“Slough’s financial problems result from a range of challenging financial issues that have grown in scale over a number of years, and as a new team we are committed to changing the way the council operates to match our resources.

“The section 114 notice is one step in what has been, and will continue to be, an on-going programme of improvement to our financial footing, which began with our new financial and executive management team.”

The main issues identified by Slough Borough Council’s new finance team which led to the 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

•         faces a range of financial pressures and issues

•         has effectively no unallocated general reserves

•         has been incorrectly charging some revenue costs to capital

In June, in an internal video seen by the Express, the chief executive admitted the local authority was facing ‘very, very challenging times’ regarding its financial position. 

Auditor Grant Thornton UK LLP released two damning reports into financial situation, saying the council had insufficient capacity and skills within the finance department leading to calls for council leader James Swindlehurst to resign

Cllr Swindlehurst dismissed the calls and said he would take full responsibility for the financial governance of the council as part of his cabinet reshuffle. 

CIPFA CEO Rob Whiteman said: “Slough’s section 151 officer has done entirely the right thing, with the intention of this legislative provision being to implement a brake whilst the council plans an accelerated change of direction to restore its finances.”

CIPFA, the Chartered Institute of Public Finance and Accountancy, is a professional body for accountants working in public finance.

"It appears that the resource requested by Slough through the capitalisation directive is insufficient to balance the books,” Mr Whiteman added.

“As for any council, whilst the CFO has a vitally important role to highlight the position, financial recovery will need a concerted corporate response from elected members and chief officers."

Slough is only the third council to be issued with a section 114 notice in recent years following previous orders at Northamptonshire County Council and Croydon.

A spokesperson for Slough Borough Council said: "Over the coming months the council will be taking action to improve the current financial situation including reviewing land and other assets – including those outside the borough – and changes to internal structures and staffing levels.

"The council is also looking closely at senior grades and how services can be more efficient and provide better value for money.

"The Director of Finance, Steven Mair – who is responsible for the council’s finances – today wrote to all councillors advising them of the Section 114 notice and the formal steps now required.

"The formal steps outlined in the procedure are:

• a letter from the Section 151 officer (the Director of Finance) to all councillors advising them of the Section 114 notice
• a response from the Chief Executive
• a council meeting to be held within three weeks (July 22) to discuss the notice, response and actions being taken to meet the financial challenges."