Slough council goes bankrupt admitting it could have £150m deficit by 2025

Slough council has issued a Section 114 notice, effectively declaring itself bankrupt. 

It will pause non-essential spending whilst seeking financial support from the government.

The council’s chief executive, Josie Wragg, was keen to reassure residents that the notice ‘does not mean any immediate change to services’.

She said: “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. “

Public health services, social care and library services will continue to be available to residents.

What’s the current financial situation?

The Section 114 notice describes the financial situation as ‘of an extremely serious nature’.

As of the end of March 2021, The Labour-run council is estimated to have a deficit of £56 million, which is set to increase by a further £40 million in 2021/22. 

By 2025, the council estimates it will be in deficit of £159 million. 

The council cites a number of issues that have led to the current state of the finances, including incorrectly calculating its revenue since 2016 and quadrupling its borrowing in the same period. 

It admitted that the council effectively has no financial reserves to draw from. 

What went wrong?

The council has been aware of financial issues since 2019, when it brought in a programme called ‘Our Futures’. 

It unearthed ‘significant legacy issues’ in it's finances which they say have worsened in recent years.

The council also listed the ‘substantial resources’ dedicated during the pandemic to mitigating the worst effects of Covid-19, which they say was disproportionate to neighbouring Boroughs in terms of infection rates and resulting job losses. 

For example, the pandemic has created a significant increase in the number of people requesting Council Tax support in the borough.

Yet the Leader of the Opposition, Cllr Wayne Strutton, said the residents shouldn't have to pay for the financial mismanagement:

What happens now?

A council meeting will be held within three weeks to discuss the Section 114 notice and the actions being taken to address the financial challenges. 

Slough council is in the process of implementing a number of cost-cutting measures however it admits that this will not be enough to resolve the deficit. 

Measures include plans to begin reviews of staffing and pay grading, as well as the disposal of land assets that don’t bring in enough money.

Chief Executive Josie Wragg said: “There is no quick fix. This will be a long process. We were on the wrong path financially, but we are committed to making the changes needed and as officers, working with the political leadership and government to reduce disruption as much as is possible.”