A West London council has been bailed out with a £25 million government grant following claims it could bankrupt. Hillingdon Council accepted the grant from the Department for Education after a gap in its schools’ budget raised fears on bankruptcy on the Labour benches.
The government bailout will plug just over half of the projected £45 million schools deficit the council is expected to rack up by the start of the financial year 2025/26. A condition of the government grant says that Hillingdon Council will have to find the remaining £20 million itself.
The council’s request for a government bailout came after it overspent on schools’ funding due to a larger-than-expected number of pupils with special educational needs in the borough. Hillingdon’s deficit stands at £38 million, larger than the council’s total reserves, meaning they would be unable to pay it back straight away should they have to.
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The news of the bailout follows a row that broke out amongst councillors in January, when opposition councillors accused the council’s leadership of putting the council’s finances in jeopardy. According to Labour councillors, Hillingdon’s schools’ fund deficit was a result of the Conservative’s financial mismanagement. Hillingdon Conservatives denied this and said the claims were exaggerated.
Proposing a motion to accept the government’s funds at a meeting of the council’s cabinet, Cllr Martin Goddard said: “The overall financial position of the council continues to be one of financial strength and stability.” He added: “This is a great step forward. It will achieve a situation where we will eliminate this deficit by 2025.”
The government will give Hillingdon Council £11 million before the end of the current financial year in April, with the remaining £14 million to be spread evenly over the next four years. Hillingdon Council will have to pay £4 million per year over the next five years to fund their part of the deficit.
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Hillingdon Labour’s Finance Lead Tony Eginton said: “Although we are thankful that the Safety Valve Agreement has been obtained, the fact is that this will affect our residents by additional costs on the £20m which the Council has been forced to offer. Had the Conservative administration signed up to the Safety Valve agreements in 2021, we believe that this additional burden on council taxpayers would have been avoided.
“All of those agreements included grants to cover the full amount of the Schools’ Budget deficits. Therefore, because of the one year delay by the Conservatives, every one of our households are stuck with the extra £200 cost to be settled in the future.”
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