The levelling up secretary Greg Clark has announced that he is “minded to” expand further intervention measures in Slough Borough Council, as commissioners fear the authority cannot achieve financial stability.
In a report published on 28 July, commissioners outlined “with confidence” that the council will not be able to achieve a path of financial and service stability within the next three years, as it currently doesn’t have the capacity and skills.
Commissioners were sent into Slough Borough Council on 1 December 2021 to address the serious financial and management failures, which followed the issuance of a section 114 notice in July 2021.
Clark said: “The commissioners’ report has assured me that the current intervention measures remain necessary in Slough.
“Councils must deliver for the people they serve – which is why I am minded to expand these measures to deliver swift and long-lasting improvements.
“Whilst this decision is not taken lightly, difficult decisions must be taken to protect hardworking taxpayers.”
Excessive Borrowing
In the report, the commissioners highlighted that the local authority has “borrowed excessively” over the past years as its loans have increased from £170m in 2017 to £760m in June 2021.
It stated that the council’s current levels of borrowing stand at £680m and the council will need continued financial support for at least six to eight years into the future.
The commissioners said: “The level of support required is unprecedented and will require at least £670m of capitalisation support over the next few years, together with asset disposals of some £600m to be achieved over the next three years and revenue savings of some £20m per annum on a net budget of only £108m.”
The commissioners blamed the high levels of borrowing on the council’s “overly ambitious capital programme”.
Councils must deliver for the people they serve – which is why I am minded to expand these measures to deliver swift and long-lasting improvements.
MRP breaches
The report also noted that the council breached Minimum Revenue Provision rules in 2021/22 as a sum of £34m should have been included, yet only £40,000 was provided.
It also stated that: “Slough Borough Council was wrongly charging revenue costs to capital; had not made appropriate provisions for items such as bad debts or insurance; had run down its reserves; and had misused capital receipts.”
The commissioners attributed the financial breaches to a “lack of competence of a range of officers and some by a more deliberate action”.
The report stated that the finance portfolio was held by two councillors from late 2017 to just before July 2021. It was then held by the leader of the council along with many other roles from June 2021, yet no councillor pointed out the financial breaches.
It said: “What is surprising is that no councillor seemed to notice.”
The commissioners also criticised the work of the council’s internal audit and scrutiny processes, which “failed to work effectively, even after the external auditor failed to certify the 2018/19 accounts”.
Internal restructure
Commissioners said that the council’s inability to work coherently was hampered by the former chief executive, Josie Wragg, who devised a new officer structure during the Covid-19 pandemic that was supposed to save £4m per annum.
“Irrespective of the external circumstances, it was totally unfit for purpose and resulted in the speedy destruction of officer capacity and competence with many remaining individuals now in posts they had no experience in and whole teams being made redundant which were essential to delivery of statutory services,” the report added.
The level of support required is unprecedented and will require at least £670m of capitalisation support over the next few years, together with asset disposals of some £600m.
Slough Borough Council’s response
In response to the proposed further intervention, Councillor James Swindlehurst, leader of the council, said: “The mistakes which brought us to this position are laid out clearly, but what is also clearer as we move forward is what we need to do to help put things right.
“We have always accepted the seriousness of our situation and the difficult decisions we have to make in the coming years.
“If the processes and arrangements to recruit a strong officer team can be streamlined or simplified, so we can move forward and restore staff capabilities more swiftly until the council is further stabilised, then we accept this will also assist the council’s recovery.”
Slough Borough Council and other interested parties will have until 11 August to provide representations on the proposed intervention measures.
This comes as Slough Borough Council approved plans in June to restructure its finance department to enhance capacity and capability.
Irrespective of the external circumstances, it was totally unfit for purpose and resulted in the speedy destruction of officer capacity and competence.
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