Cabinet asked to declare financial emergency

Emergency action needs to be taken to reduce all non-essential spending at Shropshire Council to prevent the Government stepping in.

That is the grim reality facing the authority, with Cabinet being asked to declare “a financial emergency” when it meets on Wednesday (September 10).

Latest figures show that the council is projecting an overspend of £35.169 million by the end of the 2025/26 financial year. That is £889,000 above what the present financial resources it has.

Legally, this is not allowed, so unless immediate action is taken to balance the books, a Section 114 notice will be served on the council.

“We are forecasting spending more money than is coming in and, understandably this can’t continue,” said Councillor Heather Kidd, leader of Shropshire Council.

“For me, the alternative is not an option. If we do not produce a balanced budget by March we will be forced – by law – to deal with a Section 114 notice.

“It means that we will effectively pass over control of the whole council to government-appointed commissioners.

“Cuts will be made. Services will be dramatically reduced. And it will be many years before the council can properly retake control of both our finances and our services. We must not let this happen.

“We have measures already in place to reduce our spend and substantial savings have already been achieved, but we must now do even more.

“As a new administration, this budget is something we have inherited. As a council, we must all move quickly to challenge every pound and stop all non-essential spend.

“If we do this, I’m confident that we can balance our budget by the end of this financial year. And at the same time we are working through plans to become a sustainable council, providing a better future for us all, but it won’t be easy.”

Earlier this week, the council published the quarter 1 finance report, which covered the period of April 1 to June 30 and forcecasted an expenditure overspend of £33.544m.

However, Councillor Roger Evans, Cabinet member in charge of finance, said unexpected increases occurred during July, meaning situation has got worse.

“The quarter 1 report showed that as at the end of June and following the challenging work of the council staff the reserves were expected to continue increasing,” said Cllr Evans.

“The level of reserves however was still acknowledged as being at a critical level. This situation was due to the farcical budget that the Conservative administration whilst in power set for this year.

“Due to their failings to make promised savings there was again an overspend last year of just over £41m.

“Even this level of overspend though was only achieved after borrowing an extra £29m in March from government using the exceptional capital grant argument. This in fact is a loan which will take many years to repay.

“It needs to be stated, so there is no ambiguity, that we, the council are in this
position because many of the £41m of identified savings that the last Conservative administration proposed 18 months ago, assured and persuaded others could and would be made, failed to deliver them.

“In fact, up until recently there were in fact no published plans on how to make the majority of them.”