A West London council at risk of bankruptcy is due to run out of money by March 2026. A damning report says financial reserves are “projected to be negative” within 8 months.
Hillingdon Council has been under immense financial pressure since it was revealed earlier this year it must make £34 million in savings to avoid issuing a section 114 notice – effectively declaring bankruptcy.
The Local Democracy Reporting Service [LDRS] contacted Hillingdon Council for comment, however it declined to comment. Last week, Hillingdon Council informed the LDRS it would not engage with any requests due to what it considers as ‘bias’ in our reporting – something we strongly reject.
Technically, a council cannot go bankrupt, nor can it possess negative reserves. Councils are legally required to balance their budget, however, a new report has revealed that despite being “on top” of its savings plan, Hillingdon remains at serious financial risk.
The council has now entered discussions with the government for Exceptional Financial Support [EFS]. EFS is temporary financial assistance provided by the government to councils that are facing severe financial difficulties.
In the current financial year, the government has already agreed in principle to provide this support to 30 councils. Under current circumstances, Hillingdon Council will be unable to produce a legal budget without support.
The council have also found a significant overspend in the 2024/25 budget, much larger than anticipated in January. Since, the situation has worsened by £20.5 million, with the overspend now reaching £31.5 million.
Additionally, there is a projected overspend of £16.4 million in the 2025/26 budget should things continue. The report also found historic accounting errors going back as far as 2013 – which is a major reason why the reserves will fall into a deficit.
In February it was revealed that due to years of “overspending and under saving” the council had reached a critical financial position. The report, published in read: “Reserves fell by 25 per cent in 2023/24, and are projected to drop to £20.3 million next year, a loss of £41.7 million in four years.” – this has now been wiped out entirely, only months later.
Somehow, these errors had not been picked up on until recently. The LDRS asked Hillingdon Council why this is, however the council chose not to comment.
The report does not state that the council is at no risk of declaring bankruptcy, as stated by Cllr Goddard at full council earlier this month. Instead, The Chief Finance Officer says there is no need to issue a Section 114 notice “at this time.”
In July, Council Leader, Cllr Ian Edwards said the council had spent £16 million on housing asylum seekers in the last five years. This is roughly half of the required savings which were needed to balance the books in 2025/26 alone.
Cllr Edwards said in a statement shared online earlier this month: “The government’s failure to understand the impact of national policy on the borough cannot continue. It is unacceptable, unfair and unreasonable to continue to expect that the cost for this national responsibility should be met by our taxpayers alone.”
The report outlines what the council says is ‘significant underfunding’ for many years, with inflation, running costs, the pandemic, national insurance rise and housing refugees who present from Heathrow Airport, all cited as reasons for increased financial pressure.
Whilst it is the Home Office which covers the cost of housing asylum seekers, the council often must house those who are vulnerable or have children when their application is denied.
The LDRS contacted Hillingdon Council for comment, however it declined to comment. Last week, Hillingdon Council informed the LDRS it would not engage with any requests due to its claim of ‘bias’ in our reporting – something we strongly reject.
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.
