Royal Borough in talks with Government about Exceptional Financial Support


The Royal Borough of Windsor and Maidenhead has begun talks with the Department for Levelling Up, Housing and Communities about a financial support package needed for the council to deliver its crucial plans for financial stability.

The council’s financial challenges are well documented and due in large part to historical local and national decisions going back many years. Year-on-year reductions to council tax for a period of six years from 2010 have left the council’s budget £30m lower than if council tax had risen in line with average increases across the country. At the same time, the council’s debt increased from £58.7m in 2014 to £204m by March 2023, during the time when Government funding to local authorities was cut by 30%.

This left the council with extremely low financial resilience, with reserves in April 2023 at an unaudited £10m – the lowest known reserves of any unitary authority. Since then, rising demand and costs for services – particularly social care – have put all councils under severe pressure, including the Royal Borough.

As part of its robust approach to achieving financial stability going forward, the Royal Borough recently undertook a forensic reconciliation of its budget and balance sheet transactions – the first for many years – which has uncovered more historical costs which weren’t previously budgeted for. Some costs go back many years and now have to be set against already low reserves.

Over the past year, robust and achievable plans have been put in place to transform the council, with a new Council Plan; a balanced budget for the current financial year; and a comprehensive service transformation programme already in progress to achieve savings this year and over the medium-term. Despite this, such low reserves make the council’s position untenable in the short-term – unless additional financial support is agreed to provide the council with the time needed, in the medium-term, to deliver its plans to become financially stable.

Exceptional Financial Support (EFS) from Government – sometimes called a capitalisation direction – is effectively short term support which is paid back over the medium term via capital receipts. Access to additional funding at this point would give the council a breathing space to deliver its planned transformation programme and reduce the risk of having to issue a statutory Section 114 notice, which would lead to severe consequences for the borough and local people. EFS arrangements are already in place for 19 other councils in 2024/25.

Councillor Lynne Jones, Cabinet Member for Finance, said: “We’re confident in our plans to make savings this year and transform the council over the medium-term. But we continue to find historical unfunded costs in the budget, and in previous years, which need to be set against the council’s already minimal reserves. We are determined to ensure that we can state the true financial position of this council and our figures going forward are accurate and robust.

“Due mainly to historical decisions, the council simply doesn’t have the financial resilience to manage the risks ahead, which is why we’ve begun discussions with Government about additional support. This will give us the time and capacity to deliver our plans and achieve the transformation needed to become financially sustainable, while continuing to maintain services for residents.

"We’ve been open and transparent about the challenges we face and will continue to be, which is why we’ve commissioned CIPFA (the Chartered Institute of Public Finance and Accountancy) to review our financial processes and the robustness of our plans.”