A BANKRUPT council’s bailout has more than halved by millions of pounds but a “huge of amount work” is still to be done to reach the “promised land” of financial stability.
Earlier this year, Slough Borough Council (SBC) asked for a significant request to government of £307m to help reduce its gargantuan debts and overspend – with fears another £474m would be needed, totalling £782m.
In July 2021, SBC effectively declared bankruptcy after it discovered it had a £760m borrowing debt and a £479m blackhole. It needed to sell up to £600m worth of its assets and make £20m savings year until 2029.
The government said it was ‘minded to approve’ the council’s £307m capitalisation direction, which means the council will be allowed to use money from the asset sales into the revenue budget if external auditors sign off its accounts from 2018/19.
Speaking at a cabinet meeting, Cllr Rob Anderson (Lab: Britwell & Northborough), lead member for financial oversight, said the new estimates from the council’s top finance team show this potential £782m could be more than halved to £369m.
This means SBC may not need to submit a further £110m capitalisation requests from 2029/30.
He explained at Wednesday’s meeting it was due to improved and accelerated asset sales that will avoid paying off the high-interest rates, future government grants, improvements to Slough’s council tax collection, and assumptions that the council tax cap will remain at 2.99 per cent.
However, he stressed this was all estimates where figures could go up and down depending on future situations, such as inflation.
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With SBC’s financial plan in place, Cllr Anderson said it was “starting to come to fruition” to pay down the interest rates and the minimum revenue provision (MRP), which is money set aside from the revenue budget to pay off the borrowing, as well as “de-risk” the council from further costs and financing.
If the assumptions are correct, this means only £449m from asset sales, rather than £600m, will be needed, which Cllr Anderson said the council’s property portfolio is “more than sufficient” to reach that revised target.
SBC also believes it will be able to reduce its £760m borrowing to £570m next year and then to £280m by March 2029, which is in line with other local authority’s debts of a similar size to Slough.
Making £20m savings a year until 2019 is an “onerous task” for officers, but with the new estimates, the finance team believes it can make about £14m savings a year from 2024 until 2029, and up to £9m thereafter.
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Cllr Anderson said these revised savings are around the levels a council “expects” to face each year. But he warned Slough will still have to hit those yearly savings or else it will increase the capitalisation direction, causing the MRP to increase.
He said: “There’s been a huge amount of progress, but it just sets us up for a huge amount of more work, I’m afraid because we’ve now got, I believe, what is an achievable plan, and nobody should be under any illusions that it’s going to be easy.
“It still requires us to sell an awful lot of assets at pace to achieve the savings that we get and it’s going to require us all to take very challenging decisions in our departments to make sure that we make those savings that allow us to hit these milestones in that number to get us to that promised land in 2029 of getting back to a council that’s in a stable position.”
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