A West London council at risk of bankruptcy is already behind on savings needed to stay afloat next year – councils technically can’t go bankrupt but issuing a section 114 notice is effectively this because it means it cannot commit to any new spending. Hillingdon Council ‘must deliver’ £34 million in savings this year, and an additional £17.8 million next year to avoid issuing a section 114 notice.
Speaking to the Ruislip Residents Association on Wednesday, April 9, Council Leader, Councillor Ian Edwards, revealed that some planned savings for next year had been ‘blown out of the water’ due to the effect of President Trump’s tariffs on the stock market.
He said: “We actually have to support a very generous pension fund for our employees, and built into our budget, it is there, from the year 2026/27, so next year onwards, we were anticipating being able to reduce the pension contributions that we made because the stock market had been doing well and we had a surplus in that budget, in the pension fund.
“This is the local government pension fund, so all local authorities were thinking ‘oh we can take a few million pounds here of saving and reduce our pension contributions’, and that is built into our budget. In 26/27 we are expecting to make a pension holiday, a smaller amount, but my expectation is that has been blown out of the water in the last few days, so that is another pressure that is facing us as a consequence of our friend Mr Trump.”
When asked about Ian Edward’s comments, Hillingdon Council told the Local Democracy Reporting Service (LDRS) that the council forecast a 4 per cent reduction in pension contributions. According to the local authority, this was simply a ‘proposal’.
Many pensions are long-term low-risk stock market investments in a mix of assets in different countries. This diversification of pension funds reduces risk to the pension pot, and allows it to grow over time.
Hillingdon Council’s pension fund is currently 125 per cent funded, which means the fund has 25 per cent more assets than it currently needs to pay out future pensions. The council had planned to reduce employer contributions to the fund as a result of its healthy standing.
This then can be considered a saving by the council in a budget, freeing up cash to invest in other council provided services. However, according to Cllr Edwards, the US tariffs, which have sent stocks tumbling, has affected the council’s pension fund, and therefore planned savings can no longer be met.
This raises concerns because, as revealed by the Local Democracy Reporting Service (LDRS) in January, it is pivotal that Hillingdon Council meet budget saving targets due to the fragile state of their reserves after consecutive years of depletion. If these are not met, the council may have to declare bankruptcy and relinquish some control over finances to the government.
A section 25 report by the council’s previous CFO (Chief Financial Officer) on the 25/26 budget described the budget as ‘very high risk’ because of the scale of savings needed. The report also stated that the first quarter of the financial year would be a key test because if the council is already falling behind on savings the risk of financial instability rises ‘significantly’.
Simultaneously to the ongoing fragile financial situation at Hillingdon Council, the authority is now without a CFO. The previous CFO, Richard Ennis, has recently left his post, the LDRS understands. It is understood that his role was always an interim one, however at this time the post remains vacant.
Labour Cllr Stuart Mathers was the previous chair of Hillingdon Council’s pensions committee. He has said the revelation by Cllr Edwards was alarming.
He told the LDRS: “The section 25 report at this year’s budget council clearly spelled out the urgency and critical need to meet every single saving to avoid bankruptcy. It is alarming and raises further red flags that the Leader of the Council, Ian Edwards, is going to residents association meetings providing excuses on next year’s savings when he hasn’t met this year’s.”
Hillingdon Council said: “At a recent Ruislip Residents’ Association meeting, Cllr Edwards spoke about local government finances within the backdrop of the unpredictability of the wider global economy, in particular, the potential effects of US tariffs on UK inflation and interest rates, and how the council routinely exercises caution through its financial planning processes.
“It’s not uncommon practice for local authorities to reduce pension contributions, where they have adequate resource, to make savings (Kensington and Chelsea have reduced theirs to 0 per cent for 2025/26). The change does not impact on the benefits employees receive from the Local Government Pension Scheme.
“The council forecast a potential 4 per cent reduction for the 2026/27 financial year in the 2025/26 budget report, however this remains only a proposal. With the council’s pension fund set to be re-evaluated through the routine triennial evaluation process in summer, the council will then take a view as to whether it should be included in the 2026/27 consultation budget to be presented to Cabinet in December.”
Philip is a Local Democracy Reporter covering Ealing, Hillingdon and Hounslow, with a focus on council decisions, housing, planning, licensing and community stories across west London.
