Slough officers find more mistakes in council's accounts

Slough Borough Council’s interim chief financial officer Steven Mair and his ‘A-team’ finance officials have been digging through the local authority’s accounts to rectify and bring to light historic accounting errors.

In July 2021, when the council declared a section 114 – effectively declaring bankruptcy – Mr Mair estimated a then budget gap of £174m by 2025. This figure has now increased to £308m – but councillors have been warned this figure could continue to rise.

As part of the recovery plan to fix the council’s money issues, an update was given to senior councillors at a cabinet meeting on Monday, January 17, on the findings in the 2018/19 books.

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In the report, it states 60 per cent of the notes in those books will have to be ‘restated’ due to inaccuracies and mistakes. This will then form a “solid base” when officers dig through the 2019/20 and 2020/21 accounts.

The minimum revenue provision, money set aside to pay off borrowing, has increased from £15m to £69m.

About £13m of section 106 funds, money paid by developers to the council, was ‘incorrectly treated’ in 2016/17 because the conditions associated with the agreements had not been met, therefore it had been incorrectly recognised as income.

The council had to cancel a majority of its capital projects due to it freezing its borrowing to fund those schemes. As a consequence, £4.5m of a lease for a plot of land to be used for an extra care home development has to be recognised as an ‘onerous contract’.

Steven Mair, interim chief finance officer

This means the 40-year contract will rack up unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. A £600k development cost of the cancelled project will have to be written off and added to the capitalisation direction, capital money used as revenue.

The council will have to set aside a £2.6m provision for refunds to tenants arising for the High Court ruling of Thames Water and Southwark Council case.

This will come out of the housing revenue account’s reserves, which will decrease to £8.2m by the end of this finance year. A planned repayment of £10m borrowing is also set to be taken out of this reserve.

The council will have to alter its asset value after 132 of its properties were misclassified as investment properties instead of operational assets.

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Further findings also discovered the figure for debt the council cannot be recovered has mounted to £11m.

Councillor Rob Anderson (Lab: Britwell & Northborough), lead member for financial oversight, said these mistakes were down to the lack of “technical expertise” and “robust” review systems in finance over the last five years.

Mr Mair was asked by councillor Martin Carter (Lab: Britwell & Northborough), lead member for housing and environment, asked if any more “boulder-sized problems” will be uncovered.

The chief finance officer said: “I cannot give you an absolute on that. We continue to prepare the accounts. We had an issue of a few million pounds literally over the last weekend which came out subsequent to this report.

“We have the vast majority of the 2018/19 accounts done. We’re on about a fortnight’s timetable now to try and get them completed. Grant Thornton [external auditors] are going to put a special projects team on order on the whole of the council’s accounts.”

The council could not give a set figure on how much its financial pressures have grown as the accounts remain under “constant review”.