A bankrupt local authority could have to raise council tax by 20% a year and be forced to sell thousands of homes and other assets under “unprecedented” plans imposed after racking up catastrophic debts amid an overspend of hundreds of millions of pounds.
The scale of financial and management chaos at Slough Labor council is revealed in a scathing report by a team of government commissioners sent to run the authority after it declared effective bankruptcy a year ago.
He is calling on ministers to give special powers to commissioners to effectively rebuild “the basic foundations of local government” in an authority he says has no top leadership, is facing a major staffing crisis and is struggling to deliver the which he calls “extremely fragile” services.
The council has been told to offload hundreds of millions of pounds of assets to fund its recovery programme, including its stock of around 6,700 council houses and a number of development sites earmarked for housing.
But the report warns council leaders that even a sale of fire assets – everything the authority owns except roads and parks is said to be “on the table” – may not be enough and which may need government financial support for up to eight more. years.
The precarious state of Slough’s finances means local residents face potential council tax rises of between 12% and 20% in each of the next three years, the report says. Annual council tax increases are normally limited to a maximum of 5%.
Although Slough initially reported a £100m “black hole” in its budgets at the time of its Section 114 bankruptcy notification in July 2021, this has increased to £480m as the auditors reviewed the books. It also owes £680 million in loans in recent years to finance a series of property developments.
In a formal response to the report, local government minister Paul Scully said the “unprecedented” scale of the financial challenge in Slough meant “radical solutions may be required to ensure best value and service delivery sustainable for the residents of Slough.”
The commissioner’s report describes a council reeling from years of disastrous investment decisions and leadership failures and now struggling to provide even basic services while struggling to recruit and retain staff.
“Even at the best of times, managing such a small unitary authority would be very difficult, requiring political and official leadership of the highest quality and a degree of luck, in the hope that nothing would go wrong. Sadly, this did not this has been the case in recent years,” the report says.
The report attributes a series of financial failures in recent years to incompetence and deliberate missteps by officials, including over-ambitious borrowing, depleting reserves and misusing capital revenues. “What is surprising is that no councilors seemed to notice,” the report said.
It reveals senior council executives spent £2.8m on consultants with little local government experience to guide a management shake-up which was supposed to save £4m. The ill-fated plan, launched at the height of the lockdown, increased costs by £1m and left the council without key staff.
The scheme was “grossly unfit for purpose and led to the rapid destruction of the ability and competence of officers with many individuals now left in positions in which they had no experience and entire teams being dismissed which were essential to to the provision of statutory services,” the report said. .
The commissioners’ report says many of the sites that were axed under the plan now need to be re-created. There is only one permanent permanent director at the council, which is heavily reliant on agency staff, particularly children’s services, which have been in special measures for eight years.
Former Slough chief executive Josie Wragg was sacked by commissioners in March for “gross negligence and reckless behaviour”.
James Swindlehurst, the leader of Slough council, said: “The mistakes that got us to this position are clearly laid out, but what is also clearer as we move forward is what we need to do to help fix the things. We have always accepted the gravity of our situation and the difficult decisions we will have to make in the coming years.”