Bankrupt Slough Council needs to find £6m extra savings next year

Slough’s chief finance officer Steven Mair said due to inflation, interest rates, energy costs, pay rises, and the cost of the council’s contracts increasing, the local authority will now need to find £26m in 2023/24 as part of its large scale cutback exercise.

It has so far identified £16.4m of savings for next year out of the original £20m target. Officers have been tasked to find the further £6m “in the next few weeks,” Mr Mair told councillors sitting on the overview and scrutiny panel.

The council, which effectively declared bankruptcy last year, has to find £20m a year and sell off up to £600m of its property and land in order to reduce its £760m borrowing debt and bridge its £469m blackhole.

Observatory House (Image: Google Maps)

Mr Mair warned these additional savings will require “challenging decisions,” adding: “Clearly there are impacts as consequences in making these savings. People are trying to be efficient as they are, but I don’t wish to diminish the magnitude of the changes and decisions the council will have to make.”

He also warned further savings may need to be found after Christmas if government funding is less than anticipated. The council should know its settlement in the second week of December.

Speaking at the meeting on Thursday, October 13, Cllr Harjinder Gahir (Lab: Wexham Lea), chair of overview and scrutiny, said the major cuts made are already making Slough look like a “third-world country”.

The council is also struggling to meet its £20m target for this year with a shortfall of £4.4m – primarily driven by its children’s company, Slough Children’s First, not being able to make the cuts on time.

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In the report, it states the budget will still balance and the shortfall will be offset by the £25.5m reduction in the capitalisation direction, capital money that is used to fund day-to-day services.

Typically, a council would use its reserves to mitigate the unachievable savings. But because Slough has no backup money, which was drained from the gargantuan pressures it is facing, the lead member for financial oversight, Cllr Rob Anderson (Lab: Britwell & Northborough), said the council has to be “better than the best” to achieve its £20m target.

In the worst-case scenario, the council was facing a large capitalisation direction of an eyewatering £762m by 2028/29, meaning Slough would have to sell way more than its asset portfolio, if it failed to make its saving targets.

However, new assumptions from Mr Mair’s financial team show that has reduced to £369m due to the sale of assets coming in earlier, the council improving its debt collections, anticipated government grants, and council tax rising by 2.99 per cent per year.

No wiggle room

It was stressed that these are assumptions and could go up or down later on. It is also dependent on the council achieving its savings target and receiving payment for the asset sales on time.

If these predictions are correct, the council won’t need to save £20m a year until 2028/29, but about £14m a year from 2024/25, and will reduce its £760m borrowing debt to a more manageable £280m by 2029.

Whilst this would ease off some pressure on the council, Mr Mair warned there cannot be any “wiggle room” in the asset sales, savings programme, or in the assumptions to make these predictions a reality as well as return to financial stability.

He said: “I am confident that the finance team and colleagues in other services can make this happen, working with the lead members.

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“I must emphasise this would require a lot of challenging decisions by members of all ilk. There will be changes that people will have to face and there will be changes in staffing levels.

“It is a very challenging position, but it is a very manageable position because of all the work that has happened so far. Previously, it was an extremely challenging position, possibly undoable.”