Hillingdon Council is facing a serious financial problem. It is significantly more serious than we have understood until now. In a report which will be presented to this Thursday evening’s Cabinet meeting, posted to the Council’s website today, there are new details of how bad the situation has become.
For the 2024/25 financial year that just ended in March 2025, they are £31.5 million worse off than they had previously reported. Their situation worsened significantly in the last couple of months of last year.
Looking ahead for this financial year, from April 2025, they’re already predicting they’ll spend another £16.4 million – much more than the budget permitted. As a reminder, they had previously said that they needed to save £34m this year to remain on-track (as well as an additional £19m in saving next year), so it is clear that they no longer expect to be able to remain on-track.
Taking into account the newly historical revised figures, higher costs, and failing to make the savings that were necessary, the Council will exhaust its reserves before March 2026.
This is not simply because of Heathrow
This is not solely down to LB Hillingdon “paying for asylum seekers” – not least because, at worst, that spending totals £16m since 2020. Problems revealed with Hillingdon’s finances today not only refer to additional £16m in spending this year, they also refer to accounting errors dating back more than ten years, and refer to spending throughout the budget.
We will cover the “asylum spending” in another post next month: our emails asking for accurate figures have been ignored, so we had to file a Freedom of Information request – which we expect Hillingdon to drag out until the deadline, if they answer at all. We are more keen to understand the situation than it seems Hillingdon are prepared to explain it.
Decades-long problems
Some of the revisions relate to “clearly very problematic” historical problems with Hillingdon’s accounts – described as a “number of accounting errors or assumptions going back as far as 2013/14 that need to be rectified and written out”. These therefore predate Cllr Goddard’s time of being responsible for the council’s finances – and date back to the time of his colleague Cllr Bianco, the previous Cabinet Member responsible for finance. Cllr Bianco is a ward councillor for Northwood Hills and is now Deputy Leader of the Council, and the current Cabinet Member for Corporate Services & Property. He chaired last month’s Cabinet meeting in Ian Edwards’s absence when they decided to begin closing RAGC.
Seeking bailout, not (yet) BANKRUPTCY
Seeking “Exceptional Financial Support” from the Ministry of Housing, Communities and Local Government (MHCLG) of central government is a mechanism available to local authorities where they have taken all reasonable steps to manage financial challenges themselves.
A Council cannot “go bankrupt”, but the technical term for such an outcome is a “Section 114 notice”. Today’s report says “the actions contained in the report have provided the Chief Finance Officer with sufficient assurance of not needing to issue a Section 114 notice at this time”
Less than a fortnight ago…
At this month’s full Council meeting, Cllr Mand asked Cllr Goddard if Hillingdon Council was effectively already bankrupt:
Would the Cabinet Member for Finance accept that regardless of who holds the Finance portfolio that the Council is in such a serious financial position that it may affect already be “bankrupt” and meet the criteria for a Section 114 Notice, and this reality is being withheld from the administration backbench members?
– Cllr Mand, full Council meeting, 10 July 2025
Cllr Goddard, the Cabinet Member for Finance and Transformation answered:
First of all I can absolutely confirm that this authority is experiencing financial pressures: there has been no secret about that, that absolutely continues to be the case. There is not a possibility that this Council will be required to file for Section 114. The situation is that I will be reporting to Cabinet – which is in the public domain – as to the current update in terms of Council’s financial position. I have nothing further to add at this stage.
You can read the full report: Council Budget – Outturn 202425 Month 2 Monitoring 202526
The report will be presented at the Cabinet meeting, held at the Civic Centre on Thursday evening at 19:00. You can watch the meeting live using the YouTube stream below. Before the Cabinet meeting is the Audit Committee meeting, which takes place at 17:10 in a finance ‘double header’. That meeting will also be livestreamed below.
Open Thursday's livestream video feeds
Audit Committee meeting, 17:10
Cabinet meeting, 19:00
Today’s report
Below is the overview and summary, replicated verbatim from the downloadable report.
Overview
This report provides the Council’s financial position across 2024/25 Outturn and the Month 2 forecast position for 2025/26. It presents a significant challenge to the Council and its plans to address them.
Read the full Overview
Unlike other local authorities, Hillingdon incurs additional costs as a result of being home to Heathrow Airport and the surrounding hotels commissioned by the Home Office during the pandemic, which have been used to house people seeking asylum. The Council is paying £5 million annually to support individuals seeking asylum as well as those evicted from hotels by the Home Office – a sum now forecast to total more than £16 million by the end of the current financial year which we continue to pursue, and there is an expected annual cost to the Council of £1.2 million of supporting Chagossians.
The Government’s Fair Funding Review 2.0 – a new assessment of how much money local authorities should receive from the Government – to be introduced in 2026/27, has highlighted that some councils are underfunded and in London there is an additional layer of how outer London is funded compared to inner London.
The review has identified Hillingdon Council as being significantly underfunded for several years. Whilst the Government’s intention has been to rectify this, the conclusion of the review was delayed by the Covid pandemic and recovery, now to be introduced in 2026/27 onwards.
The challenges set out in this report and detailed within have resulted in the Council expecting to request financial support, called Exceptional Financial Support (EFS), from the Government, until the funding review is implemented and resolution to the costs for managing asylum numbers over and above that which all authorities are expected to bear is addressed.
Seeking Exceptional Financial Support from the Ministry of Housing, Communities and Local Government (MHCLG) is a mechanism available to local authorities where they have taken all reasonable steps to manage financial challenges themselves.
The Council’s finances as set out in the report present a position wherein the Council’s expenditure is likely to exceed its resources. In these circumstances the Council’s Chief Finance Officer (Section 151 Officer) is obliged to brief the Council’s executive, Cabinet and external auditors, which has been done.
The Chief Finance Officer has also advised the Government office responsible for local government, the Ministry for Housing, Communities and Local Government (MHCLG) and is in active discussions about requesting EFS. This and the actions contained in the report have provided the Chief Finance Officer with sufficient assurance of not needing to issue a Section 114 notice at this time.
Summary
The report presents the Council’s General Fund financial position and the changes since the previous reports to Cabinet with a forecast outturn position for 2024/25. The outturn position presents a £31.5m adverse variance (representing a £20.5m adverse movement from Month 10) and a £16.4m forecast overspend against the 2025/26 budget.
Read the full Summary
Within this programme there are a number of workstreams, including a review of the Council’s Balance Sheet and accounting practices, this workstream has uncovered a number of accounting errors or assumptions going back as far as 2013/14 that need to be rectified and written out of the Council’s accounts, with some of these actions correcting prior year issues, however, due to those periods being closed, the Council needs to recognise them in the 2024/25 outturn position.
Whilst these issues are clearly very problematic, the Council has recognised the need to unpack the accounts to understand year on year movements across balances and reserves. This work, having identified and remedied the issues in accounting practices and processes will result in the Council having increased confidence in its financial management, with this confidence increasing as the Finance Modernisation Programme continues to further deliver.
With these issues having not emerged until outturn, the Council had no time to take mitigating actions against either the 2024/25 position or the 2025/26 budget. It should, however, be recognised that the impacts on the 2024/25 outturn position, whilst material, are not indicative of the day-to-day running of the Council, with Service Operating Budgets presenting a relatively minor movement of £1.3m within the £20.5m movement. Service delivery within the Council continues to be well run, with the spend on frontline services being below our comparator group (predominantly Outer London Boroughs) whilst continuing to receive good ratings from external oversight bodies.
The updates in this report present a position whereby reserves are currently projected to be negative by 31st March 2026, effectively meaning the Council is unable to balance the budget by the end of the current financial year. For this reason, the Council has entered into discussions with Government about financial support options. Furthermore, opportunities exist to determine and implement further cost delay and reduction measures during the current financial year.
The Finance Modernisation Programme is continuing to work at pace and is putting the Council into a better position of understanding its financial position and gaining a better knowledge of the correlation between budget modelling and outturn, with a strong focus on savings delivery, which will include some short-term spend control measures to internally manage this position as best as it can, but recognising that in the short-term, Government support will likely be required.
It should be noted that the 2024/25 position is subject to change due to the final Balance Sheet Review element within the Finance Modernisation Programme and can change from the External Audit which is due to commence in September 2025.
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