Slough Council under fire from auditors over 'fragile' finances

External auditors Grant Thornton UK LLP released two heavily critical reports on Monday, May 10, of the council and laid out four recommendations after finding:

• insufficient capacity and skills within the finance department,
• inadequate preparation of financial statements,
• inadequate general and earmarked revenue reserves,
• inadequate governance, monitoring and controls over our outside groups and companies

The 2018/19 accounts have been delayed multiple times and due to be discussed at an extraordinary audit and governance meeting on Tuesday, May 18.

One of the ‘urgent actions’ the council must take is to ‘develop a clear, sustainable financial plan to significantly replenish its levels of useable reserves’ after the auditors found the council drained their reserves to £4.3 million in 2018/19.

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The reports also found James Elliman Homes Ltd, which is owned by the council, processed their financial systems and records via SBC’s systems rather than their own.

Slough Urban Renewal, which is a partnership between SBC and Morgan Sindall Investments, also came under fire as three council officers were on its board.

The auditors recommended all financial transactions should be separated and a review of council officers on all boards as well as of all financial performance information should be undertaken.

Slough Borough Council

In response to the damning reports, chief executive Josie Wragg said the financial management hasn’t been the ‘quality’ they wanted, and the council is undertaking a ‘massive transformation journey’ to improve the areas of concern.

She said: “This journey, alongside work on the accounts for 2018/19 and related matters, has brought the fragility of our financial systems front and centre and we are taking robust action to bring about wholescale and sustainable improvements in the service.”

The audit reports come as the council, as part of its budget planning, is working on closing a budget gap of £16 million in the 2021/22 financial year and £18 million in 2022/23 of a total addressable finances of around £400million.

In February, the council requested a £15.2m capitalisation direction from government, which involves the local authority selling off some of their assets to plug a £10 million gap caused by owing a company millions in business rates since 2010, and absorbing the Slough Children’s Services Trust deficit.

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As part of the conditions for providing the capitalisation direction, the government review the council’s financial and governance arrangements, which will likely commence this May or June.

Councillor James Swindlehurst, leader of the council, said the reports were ‘disappointing but not surprising’ and SBC have already implemented a new financial leadership to address ‘many’ of these recommended actions.

He also said they will be ‘boosting’ the council’s reserves, changing governance of their group companies, and putting in place a wholescale training and development programme for their finance team.

Cllr Swindlehurst said: “Budget gaps are a fact of life in any local authority and have been for many years, especially in Slough where our funding from has been greatly reduced and has consistently failed to keep pace with the needs of our residents.

“However, as a leadership, as members along with officers, we are putting plans in place to meet the gaps in our budget and we will continue to prioritise funding to frontline services, vital to our residents.”