Agenda item

Financial Overview


The Director of Finance provided an overview of the financial context facing the Council and reminded the Committee that the focus of scrutiny at this stage was to consider and comment on the specific budget proposals.


The Council issued a Section 114 Notice in July 2021 and the problem at that stage was estimated at £174m. To address this the Council agreed a financial strategy which included the sale of assets to reduce borrowings and thus reduce the minimum revenue provision/interest costs, reduce net revenue expenditure and restructure of the finance team to provide a sustainable service going forward. 


The Council sought support from the Department for Levelling UP, Housing and Communities (DLUHC) and a capitalisation direction (CD) was agreed at £307m. The problem had grown from the original estimate of £174m (as it was advised it would) to potentially £782m and based on current assumptions and the outcome of the ongoing work now stood at c£369m. The main cause of the CD requirement was the level of borrowing by the Council without making any budgetary provision for principal repayments with £40k earmarked in 20/21 which should have been c£15m.


Linked to this was the short term borrowing from other Councils when rates were cheaper and Councils were willing to lend to Slough. However, all of the Councils who had lent to Slough were requesting that their loans be repaid and £266m had to be repaid by September 2023. It was noted that the Council’s strategy was to sell assets and if successful would generate  c£200m in the current financial year and £60m in 2023/24.


In addition to the borrowing, a range of other issues had been identified including the fact that the Council had no accounts since 2017/18. The original 2018/19 accounts had been extensively revised and resubmitted and were currently undergoing audit. The 2019/20 accounts had also been prepared and submitted to external audit. Due to a lack of accounting records it was highly likely the Council would receive a very adverse audit report for 2018/19. To address matters going forward, the Council had restructured its finance service with recruitment underway.


An outline of the key points from the Chancellor’s Autumn Statement which affected local authorities were highlighted and included Adult Social Care charging reforms delayed by two years and the possibility of increasing council tax by 4.99% in each of the next two years. The impact of inflation was also brought to Members attention and rising energy costs.


The projection of interest rates had real significance for the Council given its level of debt. Asset sales were key to reduce borrowing and hence minimise the impact of inflation on the Council’s budget. The projection of asset sales anticipated over 2022/23 and 2023/24 were critical to the recovery of the council’s finances and it was imperative that these were achieved. 


The Committee had a wide ranging discussion and asked a number of questions which included –

·  A number of the savings agreed for the current year had not been delivered.  The half year budget monitor for 2022/23 projected a shortfall of £4.3m from the £20m savings required. What specific measures had been put in place to strengthen the process to make sure next year’s savings could be delivered? All savings had been reviewed and equality impact assessments made. Regular financial monitoring reports were received and tight management and ownership of issues by each directorate to deliver the savings identified was essential.   


·  What had been the major barriers to the delivery of this year’s savings and were these due to a lack of skills and capacity to deliver them?  It was explained that the impact of external national factors had had an impact which included the impact of inflation and energy costs. Challenges remained within Slough Children First (SCF) where there continued to be an overspend. Colleagues in SCF were being assisted with the delivery of finance and programme management training. Exploring alternative methods of service delivery, eg the Digital Transformation Programme, would be key in meeting the savings targets.   


·  Impact of savings on delivery of front line services? Other income apart from council tax and assets? Other income streams to the Council included business rates and fees and charges. Given the scale of the savings required there would inevitably be an impact on frontline services and moving forward these would need to be delivered in a more targeted method. A Member asked about the affordability of senior roles and was informed that the Council needed to invest in these key roles in order to achieve savings.   


·  Energy costs:  Energy had been pre-purchased for this winter but was the Council exposed to risk if prices remained higher for longer than was expected. The Executive Director, Place and Communities reminded the Committee that the Council currently had a contract for fixed energy prices until March 2023, following which professional advice would be sought to secure the best deal possible.   


·  Measures taken to mitigate risk of lack of financial records in future and avoid similar situation? The Director of Finance stated that there was a new finance team in place and records maintained, showing clear evidence trail of decisions taken. It was important that lessons had been learnt from previous working practices to avoid the authority finding itself in a similar position in the future.  


·  Sale of assets – method used to determine sales. External Consultants had been appointed to work in conjunction with the relevant Executive Director to identify assets that could be sold. It was noted that a number of out of borough assets had been sold and monies received would be used to repay funds borrowed from other local authorities.  


·  Concern regarding what Slough would look like in the future given the scale of savings required. Members were informed that this was an opportunity for the Council to transform and deliver services in a much more streamlined approach.


·  Investigate possibility of shared services with other local authorities and/or partner agencies? It was noted that partnership working already existed in some areas of the Council and joint commissioning of services in adult services was cited as an example. Whilst other services could be looked at it, it was explained that this required an immense amount of work to establish and was not considered feasible for the Council at this point in time.  


·  Whether the levels of debt were likely to change and when the 2018/19 accounts would be completed.  The Committee was informed that financial figures provided were an estimate at that point in time and likely to change. It was anticipated that the 2018/19 accounts would be ready by early 2023.


Resolved – That details of the Financial Overview be noted.

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