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Hillingdon Council is receiving a double-injection of government intervention to stave off bankruptcy: a large boost in “Fairer Funding”, plus a £150m emergency borrowing bailout, the fourth largest in the whole country and the second largest in London.
While the new Fairer Funding settlement was enough to save several other UK councils from needing bailouts entirely, Hillingdon’s finances are in such a perilous state that it still required the Government to approve an ‘Exceptional Financial Support’ (EFS) loan of £88m for this year and £62m for next year just to keep the lights on.
But this £150m lifeline has arrived with a catch. The Minister for Local Government has issued a direct warning about Hillingdon’s internal governance, confirming the Government intends to move quickly to a formal review of the Council’s position. This is on top of criticism from EY, the Council’s external auditors, and strong words from the Council’s own Chief Finance Officer.
“Significant concerns” about the Council’s wider position
In her letter, the Minister says the Government is minded to provide the requested support – but adds:
“I have significant concerns over aspects of the council’s wider position.”
She points specifically to:
- “Significant concerns raised by your external auditors” and their statutory recommendations in July 2025, including the need to address weaknesses in financial management.
- A major part of the EFS request relating to £14.1m of historic accounting adjustments following a balance sheet review.
Those two points matter because they are not general comments about national council funding pressures – they are direct concerns about Hillingdon’s own financial controls and governance.
Ministry of Housing, Communities & Local Government
Alison McGovern MP
Minister of State for Local Government and Homelessness
2 Marsham Street
London
SW1P 4DF
23 February 2026
IN-PRINCIPLE CAPITALISATION SUPPORT FOR LOCAL AUTHORITIES
I am writing to inform you that the government has today published on GOV.UK details of Exceptional Financial Support provided to a number of local authorities to help them set balanced budgets for 2026-27 and this includes a council covering your constituency. I have made a Written Ministerial Statement today and have contacted all of the councils in question to ensure that they have the information required to properly set their budgets.
The final 2026-27 Local Government Finance Settlement will make available £78 billion in Core Spending Power for local authorities in England, a 6.1% increase compared to 2025-26. By the end of the multi-year Settlement (2028-29), the government will have provided a 15.5% increase in Core Spending Power for local authorities in England, worth over £11.4 billion, compared to 2025-26. This government is delivering fairer funding, targeting money where it is needed most through the first multi-year Settlement in a decade. However, delivering reform will take time, and the government recognises the challenging financial context for local authorities as they continue to deal with the legacy of the previous flawed system. In this context the government has been clear that there will be a framework in place to support councils in the most difficult financial positions ahead of 2026-27, as councils start the transition to new funding allocations.
Under the previous government, increasing numbers of councils seeking Exceptional Financial Support became an accepted part of the finance system. This clearly should not be the case and I am determined that we begin to break this cycle as part of our reforms to the system. Our reforms are making progress, and several councils have told me that our reformed settlement has made it unnecessary for them to request support, but we cannot undo 14 years of damage overnight.
Today my department wrote to a number of councils confirming that we would provide in-principle Exceptional Financial Support to enable them to set balanced budgets. In some cases, this is in relation to requests for support for prior years or to reprofile existing support agreed in previous years.
As part of this wider cohort, support has been provided to six councils whose improvement is being supported via statutory intervention. We are continuing to work with these councils and through the Commissioners and Ministerial Envoys appointed to support the councils’ recovery from more severe financial issues.
Support across all cases is being provided through in-principle capitalisation, a financial flexibility where the government permits councils, in special circumstances, to treat revenue costs as capital costs.
Our approach will ensure that support is predicated on transforming services, so that councils in difficult positions move towards a sustainable recovery. As a requirement of support, we will seek additional external assurance on councils to support local improvement as well as provide an assessment on the actions each council is taking locally to manage its position.
While the government is minded to provide the requested support for Hillingdon Council in your constituency, having considered their request and the circumstances of the request, I have significant concerns over aspects of the council’s wider position. In particular, I have noted:
- Significant concerns raised by your external auditors, and their issuance of statutory recommendations in July 2025 including relating to the need to address weaknesses in financial management.
- That a significant portion of the request relates to £14.1m historic accounting adjustments that followed a balance sheet review at the council.
It is my clear expectation that this council takes robust action to address these specific risks and issues, as part of their wider plans for financial recovery.
Given these concerns, my department intends to move quickly with the external assurance review of this council, which will include close scrutiny of the issues above and the council’s plans to address them. This will also include consideration of if any further support or action is needed to ensure these issues are being properly addressed at local level.
This government has been clear that, while we will continue to support councils and recognise that improvements will take time, we will also expect councils to make sure they are doing all they can locally to deliver for residents and reach a sustainable position across the Settlement period.
My department will continue to work closely with all councils included in this announcement, supporting and engaging with them.
Yours ever,
ALISON MCGOVERN MP
Minister of State for Local Government and Homelessness
Government review is being accelerated
The Minister also confirms that the Department intends to “move quickly with the external assurance review of this council”.
This will involve “close scrutiny” of the accounting adjustments and the Council’s plans to address them – including whether “any further support or action is needed”.
That is important: this is not “here’s the money, good luck”. The Minister is explicitly linking support to external assurance and scrutiny of the Council’s recovery plans.
Among the enormous bailouts – Hillingdon’s is the fourth largest in the country
To understand the severity of Hillingdon’s position, we should look at the national picture. Out of over 300 councils in England, only 35 required this emergency bailout for the upcoming year.
At £150m across two years, Hillingdon has secured the fourth-largest bailout in the entire country. As Hillingdon Council likes to compare itself with other London boroughs, we should note that across all boroughs, Hillingdon has the second-largest in London bailout, trailing only Croydon Council, which has well-documented historical failures.
EFS is not “extra funding” – it is borrowing
It is worth being clear what EFS is and isn’t. EFS provides a council with financial flexibility – allowing it to use capital funding (including borrowing and capital receipts) to cover certain day-to-day costs, subject to conditions and assessment.
In other words: this is not a grant. It is a way to keep the budget balanced – but it is effectively a loan that must be paid for over time, with interest. It is likely to be over 20 years, and next year the budget suggests that the repayments will be over £10 million per year.
Funding arguments don’t remove the need to fix management
Hillingdon leaders often point to national pressures and “underfunding”. Nationally, the Minister has acknowledged councils have been operating in a difficult financial context.
However, the Minister explicitly noted that the Government’s new multi-year “Fairer Funding” settlement has actively prevented other councils from needing a bailout. Southampton City Council, for example, successfully withdrew its request for EFS entirely, citing the significant increase in government funding they received. The Minister stated that “several councils have told me that our reformed settlement has made it unnecessary for them to request support“.
Locally, Danny Beales MP has separately noted that Hillingdon is due to receive an additional £126.7m over the coming years, describing this as one of the larger increases over the Parliament.
The Political Spin on Funding
Frustratingly, we have seen local Conservative and Labour councillors arguing over the additional funding – the £126.7m is the cumulative increased funding over three years, and includes some assumptions on Council Tax and Business Rates so it is likely to be a little lower.
From the Corporate Budget Changes (Appendix A6), the Council itself acknowledges the “Impact of Fair Funding Review” is an additional £33.5m in funding in the coming year, and then an additional £18.2m on top of that the following year, and then an additional £23.7m the year after (so that cumulatively, that is £75.36m more in the third year than this current year).
How this is reported is open to interpretation and statistical manipulation, and the nature of politics is that one side wants to make the number look as big as possible, the other side as small as possible.
We asked them both to meet us to explain their claims and calculations, but neither responded. We also asked Hillingdon Council’s communications team – who run the Council’s Twitter and Facebook accounts, and who got involved in the Twitter spat between the Hillingdon Labour and Hillingdon Conservative groups… and in what seems increasingly to be Hillingdon’s policy and style: they ignored our request.
We are left to question how transparent the Council truly is, when we STILL have no answers even from the Public Inspection of Accounts, and the CEO Tony Zaman this month chose to attend an award ceremony over attending the Audit Committee – leaving an empty seat throughout the 2.5 hour meeting. He has never responded to any of our questions.
This is not political criticism, the CEO is “the head of Paid Service” – unlike the Cabinet Member for Finance, he is a public servant and not an elected councillor. Residents can’t ‘vote out’ the CEO.
Fortunately, 90% of Hillingdon’s £75 million DSG deficit is also to be written off
On top of this extra funding, the government announced a massive intervention that directly benefits Hillingdon: the Government is writing off 90% of councils’ Dedicated Schools Grant (DSG) deficits. This is a huge deal: as Hillingdon’s external auditors recently warned residents that the Council’s own DSG deficit had reached a staggering £65.6 million. By the end of this year it will exceed £75 million. The Minister noted this write-off will immediately “free up capital budgets and reduce the amount spent on finance costs“. Although a huge relief, it does not remove the need for sustainable budgeting going forward.
The fact that Hillingdon still requires a £150m borrowing bailout for this coming year and expects to need more in following years despite this significant financial relief shows how serious the problems are.
Whatever view residents take on national funding, the Minister’s message is that Hillingdon still has to get its own house in order.
The Council’s own finance chiefs warn of “material risk” … again
While political leaders may point to national issues, the Council’s own Chief Finance Officers (CFO) have painted a stark picture of internal vulnerabilities in their legally required “Section 25 statements”.
Because a CFO has a statutory duty to report objectively on the budget, their assessments cut through the political narrative. For the upcoming 2026/27 budget, the current Chief Finance Officer, Steve Muldoon, explicitly warns that Hillingdon is in a position of “materially weakened financial resilience“.
Muldoon states that the budget is built on “continued material risk“ and relies on a “step change” in the Council’s performance specifically because of a “past track record of failing to deliver savings”. Many of the new savings the Council is relying on to stay afloat are flagged as “higher risk” and “complex,” meaning if they don’t work exactly as planned, Muldoon warns the Council will have to take “further corrective action” mid-year.
Haven’t we heard this before?
If this sounds familiar, it is because the previous interim CFO issued a virtually identical warning last year – which the Council leadership failed to act on. In last year’s (2025/26) Section 25 statement, then-Interim CFO Richard Ennis explicitly concluded: “The estimates are not sufficiently robust for the purposes of the budget calculations, given the scale of delivery needed“.
Ennis cautioned that the Council’s reserves were a “marginal call judgement” and “only just enough“. Finally, he warned that for the budget to remain balanced and lawful, it would be “crucial” for the Council to actually implement its planned actions.
As Steve Muldoon’s current statement confirms, those past savings were not delivered. The Council spent all of its remaining reserves, having already used the large reserves we held a few years ago to provide services and cover failed savings, leading directly to the need for this £150m emergency EFS borrowing.
These non-political, professional assessments completely align with the Minister’s concerns. They confirm that the issue isn’t just a lack of funding – it’s a fundamental concern over whether the Council’s management actually has the capability to deliver its financial plans, especially given their failure to heed Richard Ennis’s warnings last year.
As residents, what should we expect next?
A key question now is transparency and follow-through. We believe that residents should expect to see:
- Publication of the full conditions attached to the government’s EFS bailout
- Publication of the external assurance review (or, at minimum, its findings and required actions).
- A clear explanation from the Councilof what went wrong on the issues the Minister highlights.
- A credible plan showing how the Council will move to a sustainable position – so this does not become a repeating cycle.
- More transparency from the Council – no more burying of reports from the external auditors (this has happened at least twice: July’s Section 24 Recommendations were not shared with residents until being discretely published as an appendix to a committee meeting – and even then, not with the original agenda; November’s Auditors’ Report wasn’t published until February, and again, only as a late appendix… much to the Auditors’ chagrin).
The Government says EFS is intended to be temporary – and that councils receiving it will be expected to improve and reach a stable position.
For Hillingdon, the Minister’s letter makes the direction of travel clear: support is being offered – but scrutiny is increasing, and the Council is expected to act.
Have you heard the news from Hillingdon Council? You’re not the only one who hasn’t
Other councils have published details of their EFS applications and announced the acceptance of their applications on their websites, as ‘Latest News’ and they have reported it matter of factly, informing their residents of the situation and keeping them up-to-date.
Hillingdon, on the other hand, has published ‘Latest News’ about the Year of Reading, then selling the former Uxbridge Library site (without giving any indication of the sale price – as if financial details were completely irrelevant), a re-announcement of the HMO licensing scheme which finally fully comes into force in August this year, and news about serious failings… at a takeaway restaurant in Harlington.
They have published no news about the EFS application, nor that it was the fourth largest in the country or the second largest in London at £150,000,000. Both Cabinet Members for Finance that we’ve had in the last six months have implied it will not cost residents anything – a point which the council’s own Chief Finance Officer explained clearly and repeatedly was not the case.
The external auditors have written about how they believe that Hillingdon’s leadership team underestimated the severity of the crisis, did not seem to fully appreciate the “magnitude and scale” of the financial challenges they were facing, failed to show necessary urgency, that they lacked a clear and credible plan to achieve financial sustainability and that they identified significant weaknesses in financial sustainability and governance arrangements.
Perhaps it should not be a surprise that, while other Councils publish their EFS details, that Hillingdon do not. Are councillors even fully appraised of it? We know that they had not seen the November report from the Auditors though November, December, and January – and it was barely circulated in February when it was finally available to anyone who knew where to look.
Residents expect timely publication of auditor correspondence and government conditions.
Budget Setting meeting – Thursday 26th February at 19:30, in the Civic Centre
All Councillors and senior Council officers will pack the Council Chamber in the Civic Centre on Thursday evening from 19:30, where they hold the annual Budget Setting full Council meeting.
Here, next year’s budget will be described by Cllr Eddie Lavery, and debated by all three parties. The meeting will be long and the arguments strong.
We hope to learn more of the EFS conditions: we expect them to have been accepted and agreed by then, and for Councillors to vote on it.
The meeting will be livestreamed on YouTube and anyone can attend in person – just turn up at the Civic Centre at the double doors at the top of the stairs near the new Library entrance.
You can read the budget documents for yourself, alongside the Budget Setting meeting’s Agenda
You can watch the livestream via YouTube from two different camera angles: