Councillors fear bailout needed to stop bankruptcy
BUDGET SHOWS AN OVERSPEND OF £38M ON SCHOOLS BY NEXT MONTH
A ROW has broken out among councillors over fears Hillingdon could “go bankrupt” without a Government bailout.
The row centres around budget proposals published by the council, which show that by March this year it will have overspent on schools by £38 million.
Opposition Labour councillors argue this could push the council to the verge of bankruptcy.
However, Conservative councillors say the severity of the council’s situation has been exaggerated and dispute Labour’s bankruptcy fears.
Documents show that Hillingdon Council has applied to the Government for a bailout, known as ‘safety valve funding’.
According to the council’s own projections, the £38m deficit exceeds its savings pot, which will be just £26m at the end of March.
This means that, if required, the west London council would be unable to immediately pay back any debts.
The Hillingdon Labour Party claims the debt has been caused by council mismanagement of schools’ funding.
However, Hillingdon Council leader Ian Edwards said: “Labour’s comment about our financial security is barely worth a response.
“Our draft budget is published for all to review and shows that our financial position is the envy of many councils across London and the country as a whole.
“Residents should be asking themselves if it is their child’s school that a Labour administration wouldn’t have invested in.
“We believe in raising the standards of our schools and it is clear from Labour’s statement that the education of Hillingdon’s young people is safer with this administration.
“In May residents will have a choice between continued sound final management with Hillingdon Conservatives or the reckless spending of Labour squandering decades of work to put Hillingdon residents first.”
A spokesperson for Hillingdon Council said: “The council, as well as a number of other local authorities across the UK, is currently in the middle of ‘safety valve’ discussions with the government regarding Dedicated School Grant (DSG) deficits.
“Allegations that these defecits have been created as a result of council financial mismanagement are false.
“They have instead been the result of Government underfunding in the DSG over a number of years.
“The safety valve process has been set up to resolve the problems around DSG deficits without risking the financial position of councils across the UK more widely.
“Any settlement deal would take the council’s financial position into account and there is no possibility that Government would bankrupt a council as part of a safety valve deal.”
In its application to the Government, the council says the overspending was caused by a huge increase in the number of children with special needs requiring school places compared to the number of school places actually available.
They point to spending on sending children out of the borough and making schools in the borough accessible as reasons for the mounting debt.
In a council school place update, presented earlier this month, it was separately confirmed that the number of primary school places available for 2022 would be reduced to save costs.
Hillingdon Labour councillor Tony Eginton, who leads on finance for the party, said: “Over the past six years, the Tories have tried to ignore the growing problem.
“It is quite extraordinary that they claim to be financially competent when this deficit risks the whole council.
“I really do find it extraordinary that this has been allowed to get to such a state before the Tory administration has taken action.
“We have been raising it in the past at council meetings but nothing has happened until now.”
Should the government grant the bailout loan, the council could be expected to make savings cuts.