Hillingdon Council is grappling with a severe financial crisis, facing a deficit of £65.71 million, the highest among all London boroughs, according to discussions at a council meeting on 11 September 2025. The council's financial difficulties are compounded by a cumulative Dedicated Schools Grant (DSG) deficit of £65.6 million as of March 31, 2025, with plans to balance the schools budget not expected until 2027-28.
The council is under pressure to address the escalating deficit, which has prompted serious concerns about its financial stability. Councillor Jan Sweeting questioned Councillor Susan O'Brien, Cabinet Member for Children, Families & Education, about how the £65.71M deficit is being addressed, noting that it is still the highest of any London borough and is still increasing.
The council's external auditors, Ernst & Young, issued a Value for Money Update and Recommendations, highlighting significant weaknesses in the council's financial management and governance. The auditors made seven formal statutory recommendations, including the need for detailed implementation plans for planned savings, a review of service delivery models, and balancing the schools' budget to prevent further growth in the Dedicated Schools Grant (DSG) deficit. The council has been instructed to perform scenario planning for how it would manage the impact of the current deficit on its financial position when the current statutory override ends in March 2028.
To address these recommendations, Hillingdon Council is implementing the Financial Modernisation Programme (FMP) and the Governance Review Improvement Plan (GRIP). The FMP commenced in February 2025, and the GRIP commenced in March 2025, with planned actions due for completion between 31 July 2025 and 31 March 2026. The Audit Committee is instructed to monitor the delivery of the actions and report back to Council in no later than 12 months, or earlier if required.
The report also raised concerns about the implementation of the Oracle EPM budget management system and the overall quality of financial information available to decision-makers. The auditors urged the council to continue at pace with the Financial Modernisation Programme (FMP) and the Governance Review Improvement Plan (GRIP) to address these weaknesses.
The council's financial woes have led to scrutiny of various decisions and processes. Councillor Sital Punja, Deputy Leader of the Labour Group, questioned why Grant Thornton was procured for the implementation of the FMP in a sole procurement tender, when Cabinet had resolved in February 2025 that CIPFA would be delivering on financial improvements. Councillor Jagjit Singh asked if the Cabinet member would seek an independent report from Ernst and Young on the reported actual savings against target for the past 15 years, so that this Council has a clearer picture on the state of the Council's finances.
Councillor Tony Burles asked Councillor Goddard what level of Exceptional Financial Support funding from central Government does the Cabinet member calculate that the Council needs to avoid a Section 114 Notice and what will be the cost to Hillingdon Tax Payers?
The council has acknowledged the need for improvement and is taking steps to address the issues raised by the external auditors. However, the severity of the financial situation and the ongoing challenges in implementing effective financial management practices remain a significant concern.
