Vital Shropshire services 'at serious risk' because of cash crisis, experts warn

Financial auditors have cast serious doubt on Shropshire Council's ability to operate from 2019/20.

They say a lack of finance could affect all services the council provides – including those considered so important that they are a legal duty.

The stark warning comes in an update for the council's audit committee, and against the background of a disagreement over the use of its reserves, and sale of land and buildings to temporarily bridge the budget deficit for the next two years.

Grant Thornton, the authority's external auditor, was brought in to assess the extent of the crisis Shropshire Council is facing.

Its report states: "The council requires savings to close a funding gap of £76.5 million by 2019/20. This is in addition to a significant savings program. Achieving the required efficiencies will be extremely challenging. In the short to medium term, the council is proposing to close its forecast budget gap of £40 million to 2018/19 by fully utilising the earmarked reserves. There is a significant risk that the council's financial position will impact on service delivery, both statutory and non-statutory in future years."

Clive Wright, chief executive of Shropshire Council, said the council's approach must be to continue providing the services people "want and need".

He said: "In the year 2018/19 we face a budget gap of £40m. It will be a big challenge to find the additional funding required and we will do this by fully utilising our earmarked reserves, by selling buildings and land to generate capital receipts, by increasing housing – thereby growing our tax base, by growing our economy to attract young people and business rates, and from commercial activity such as our energy partnership. This will enable us to continue delivering services people want and need."

The council has faced considerable criticism of plans to use reserves to fill the gap in its budget while campaigning for a greater settlement from government to help with the issues faced in 2019/20.

At the council's cabinet meeting earlier this month, Roger Evans leader of the Liberal group questioned the wisdom of using reserves and one-off funds to prop up the council's budget for two years.

But Council Leader Malcolm Pate insisted the policy would keep the authority's services running for the next two years and challenged his opposition to come up with an alternative plan.

He said: "If your priority is not supporting us to protect services, to keep services running, you can put forward an alternative. The alternative is to close down what our communities want and expect us to do."