Slough BC’s finance lead has warned that its reserves are at “unhealthy” levels, as the council reported an overspend of £14.2m for its 2023-24 budget.
The deficit, which will be financed using reserves, occurred even after including the £31.6m in exceptional capitalisation support that Slough has agreed with the government for that year.
The council is also failing to meet its target for asset sales to fund these support arrangements, which are expected to total £298.6m. This is increasing the revenue costs which arise from borrowing money.
As well as the 2023-24 overspend, the council’s budget for this year currently has an overspend of £11.7m, which a report to Slough’s cabinet last month said “requires immediate mitigating action”.
Slough’s deputy leader and finance lead Wal Chahal (Con) told LGC that the overspend had arisen due to “poor decisions” taken by the previous Labour administration.
He pointed to an overspend of approximately £12m in adult social care, and temporary accommodation where £300,000 had been budgeted, compared to an actual spend of about £7m.
In 2023-24, Slough’s service departments collectively overspent by £22.4m.
Cllr Chahal told a cabinet meeting last month that the “poor quality” of the 2023-24 budget was “unbelievable”.
He added that “the council cannot continue to fund this sort of overspend from reserves, which are becoming depleted”, adding that general fund reserves “sit at an unhealthy £20m”.
In total, Slough currently has £53.2m in reserves, including £32.2m in earmarked reserves alongside the £21m general reserve.
The budget smoothing reserve is £10.7m. The recent budget report says it is “to be emphasised” that if this year’s current overspend of £11.7m is not addressed, this amount “will be depleted in the current financial year”.
Cllr Chahal told the meeting that a “higher degree of scrutiny and challenge” will be applied to this year’s budget.
This will include a “star chamber” process that would focus an “intense lens on each department” to monitor spending, he explained to LGC.
He told the meeting that the council will also “refresh” its medium-term financial strategy in the light of the “worsening outturn”.
The recent budget report says that Slough’s cumulative asset sales totalled £223.5m by March 2024. This is compared to a target of £400m by March 2024 and £600m by March 2027.
“This target has proved unrealistic given the assets currently available for disposal and is currently under review,” says the report.
Slough’s performance is currently being overseen by government-appointed commissioners after it issued a section 114 notice in 2021.
The intervention is due to end in November. But Cllr Chahal told LGC that the council would like to continue with it for two more years, saying this would put the authority in a “better position”.
While he believed that the current financial support agreement would be sufficient, he could not rule out further problems being discovered, commenting “never say never”.
In their latest report to ministers in February 2024, Slough’s commissioners said that extending the current intervention should be “given serious consideration”.
