Slough Council will borrow £37m despite being £760m in debt

Monies spent on projects and works to improve and maintain the borough’s infrastructure, known as the capital programme, is £219m for the next five years.

While a majority of this will be funded by grants and other sources, £17m of this will be accounted for with borrowing.

Slough Borough Council (SBC) is also set to borrow a further £20m for the housing revenue account (HRA), which is the authority’s own housing stock.

The capital report acknowledges borrowing this amount may seem “counter-intuitive” given borrowing has quadrupled from £170m in 2016 to £760m after it emerged the council’s capital budget hasn’t been properly accounted for.

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Problems primarily stemmed from the minimum revenue provision, essentially money set aside to pay off borrowing, after provisions were inadequate between 2008 and 2021, totalling £70m.

An additional £29m will need to be put away to correct the minimum revenue provision for 2022/23.

Cllr James Swindlehurst Pic: Mike Swift

Speaking to the Local Democracy Reporting Service, council leader James Swindlehurst (Lab: Cippenham Green) explained most of the works are health safety works, such as insulating its housing stock, or funded works, such as highway works for major transport schemes.

The council is scaling back its capital programme by £90m and have extended the plan from a three-year strategy to a five-year plan.

Steven Mair (right) chief finance officer

Chief finance officer Steven Mair said: “On a like-for-like basis, we are borrowing £90m less than we would otherwise have done if it wasn’t for this review.

“You got to invest in further things, you’ve got to maintain the structure of the authority’s buildings, you’ve got to do health and safety checks, you’ve got to invest in ICT to help transform services and it secures the safety of the council.

“I do think the £90m reduction is a very significant reduction but you will always have some [borrowing]. The council knows this, and it has taken very sensible decisions on minimising it but equally, there will be some to ensure the safety of the council going forward.”

Cllr Rob Anderson

Meanwhile, Cllr Rob Anderson (Lab: Britwell & Northborough), lead member for financial oversight, added any borrowing they do needs a “very good reason” and has the “revenue implications” of it in their budget.

The government said yesterday it was “minded” to approve SBC’s £307m capitalisation in order to use the money from its asset sales to pay off its debt over a 20 year period.

This capitalisation only covers 2021/22 and 2022/23, meaning the council will need to make further requests until 2026/27, totalling £172m.

By doing this and stretching the debt over a 20-year period, SBC will be able to set money aside over the years when that debt is due as well as cover the interest payments. This will make the repayments “more manageable” as the council cannot pay its debt off in one year given how gargantuan it is.

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Cllr Anderson said: “The capitalisation gives us breathing space to put the money away at the right pace to pay it back in the 20 years.”

Four of the council-owned properties owe SBC £69m from an £83m loan. Mr Mair said they are “reviewing” the companies and are looking into how they will get this money back.

Nova House

The council loaned £20.7m to Ground Rental Estates 5, which owns the freehold of the 68-apartment block Nova House, to remove Grenfell Tower-esque cladding.

Mr Mair previously said it is “extremely unlikely” SBC will fully claw back the costs but now says the loan will be repaid by the company passporting the £9.3m grant from Homes England to the council, and by an insurance claim and charges on leaseholders.