Slough Council's £79m blackhole 'could have been sorted earlier'

Slough Borough Council’s budget deficit has expanded further after external auditors Grant Thornton probed into the 2018/19 accounts.

Finance officers believed the blackhole in 2018/19 was about £62m but the auditors believe that figure has increased by £16m. This was caused by inadequate record-keeping and accounting errors.

The council believes it has a £307m deficit up to 2022/23 to deal with, which could potentially rise by another £50m. The council has submitted a capitalisation request, which would allow it to use money received from the up to £600m asset sales to reduce its deficit and £760m borrowing debt.

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It has been an arduous task to audit the 2018/19 accounts, which have been rewritten five times, because of the lack of information.

The government decided to intervene in the council, which effectively declared bankruptcy in 2021, by sending commissioners to oversee its recovery.

Finance commissioner Margaret Lee said the council would have dealt with the £79m deficit earlier if proper accounting processes and financial oversight were put in place.

She said at Wednesday’s extraordinary audit and corporate governance meeting: “The earlier that you can step in be it a formal intervention that Slough has or some other form the better.

“If matters had come to a head sooner, you saw the deficit in 2018/19 was £79m and that’s the sum you would have been dealing with instead of the £357m, which is considerably higher.

Observatory House (Image: Google Maps)

“So, had you stepped in earlier, then that £79m would be the figure you would have found, and that probably would have been sorted out by now.”

Despite the five revisions, Steven Mair, the council’s most senior financial officer, said the accounts were still “not fit for purpose” when they took over in May 2021.

He said the 2018/19 accounts were effectively completely rewritten as they had to make 50 material changes that affected 100 per cent of the figures in the core statements plus 80 per cent of disclosure notes.

Cllr Wayne Strutton (Con: Haymill & Lynch Hill) said the previous finance chief, monitoring office, and chief executive “failed” in their statutory duty to be on top of this issue when the 2018/19 accounts had to go through various rewrites.

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He said: “One rewrite is human error, two rewrites are questionable, three is negligent, and four is a serious concern.

“One of the lessons that need to be learned here is that if the accounts have to be rewritten more than three times does there need to be a new statutory requirement to report a council to central government for an outside intervention to come in sooner, and the fact that it went on for so long is one of the reasons why this organisation is in the mess that it is in.”

Ms Lee said the government is “keen” to explore what the warning signs are so they can intervene earlier and avoid a situation like Slough is in from happening again.