SLOUGH Council will have to save around £20m a year to get out of its financial crisis – and spending on services will be cut.
Senior councillors met for the first time at a cabinet meeting on Monday, July 26, since a section 114 was issued, which means freezing all non-essential spending.
The local authority had to pull the emergency brake after their reserves were wiped out overnight and new financial officers found they could face a projected black hole of £174m by 2025.
At the meeting, the council’s chief finance officer revealed Slough is facing an overspend of £6.9m in their revenue budget by the end of the financial year.
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While the council has requested a capitalisation directive of up to £200m from government, allowing the borough to sell its assets to fill this void, he warned they will need to make about £20m worth of savings annually for several years.
The saving figures for each year includes £16m for 2021/22, £18m in 2022/23, and £20m for the years after.
Mr Mair predicted the council’s books should be balanced by 2026/27, assuming government grants the capitalisation direction.
The chief finance officer has previously warned cuts to services, including statutory such as adult care, and a “significant reduction” in the capital programme will have to be made to balance the budgets.
A portion of the cuts is to cover costs to repay the council’s borrowing debt after it has emerged the Minimum revenue provision (MRP) was incorrectly calculated from 2017.
This is a charge to its revenue budget to repay its borrowing. Effectively, MRP works like a mortgage where the council should’ve repaid a certain percentage of the money borrowed to pay for its assets.
That did not happen and the MRP should have been increasing to around £15m instead of downwards to £40,000.
To rectify this, the council may have to convert its temporary borrowing into long-term – but would require extra money to pay this off.
Councillor James Swindlehurst (Lab: Cippenham Green), leader of the council, said: “Clearly, the scale of overspend is alarming, not least because Steve’s predecessor [Neil Wilcox] had suggested we have a £2.4m underspend to chug into reserves.
“Of course, the most basic reason for us to declare a 114 report was that our reserves were wiped out by the significant accountancy adjustments we had to make, having an overspend at the end of the year wasn’t exactly possible in terms of our ability to massage that away with reserves because they had already gone.
“The 114 was about getting enough money into the tin and try to deal with that as the bare minimum – but also look at wider spending controls to get through the rest of the year given the 114 gives a clear message that our financial planning and direction have gotten severely out of kilter in terms of the reality where we are, and where we hoped to be.”
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Usually, councillors would be on break during August’s recess – but lead members will be powering through and liaising with officers to reassess and find additional savings to balance the books.
It was heard the asset disposal report, which eyes what assets the council could sell-off, will be reported by September.
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