Shropshire Star

Shropshire Council plan to use £70m reserves to fill funding gap backed

The use of millions of pounds of reserves and “one-off” funding to fill a council’s £70 million funding gap, is a “sufficiently mitigated” risk, according to auditors.

Published

In an assessment on Shropshire Council’s finances auditors Grant Thornton concluded that plans to use reserves to plug a multi-million pound hole in the council’s budget were a risk, but were “sufficiently mitigated” by plans to reduce costs and increase revenue.

The council faces a £76 million funding gap over the next three years, largely due to reduced grants from central government. It plans to use reserves and one-off funding to fill some of the gap.

Under the plans £16,187,350 will be used this year, £23,822,065 in 2018/19, and £15,090,560 in 2019/20. Despite the proposals the council still has a shortfall of £21 million in its projected funding for 2019/20.

The auditors said the situation leaves the council facing a “much more significant” challenge. They have warned that if not addressed “there is a significant risk that the council’s financial position will impact on service delivery, both statutory and non-statutory in future years”.

The report states: “We have reviewed the council’s financial plans and are satisfied that the use of grant funding and reserves will provide the council with financial stability to and including 2018/19. The challenge becomes much more significant into 2019/20 and the council has reported a financial gap of £21 million in 2019/20.”

In the report the auditors state that they “consider that the continued use of one off funding and reserves is high risk” but that the council’s plans to make and to save money balance it out.

The proposals include the council’s new computer system, plans to be more commercial and to look at more commercial investments, and ambitions for economic development. The report sets out the issues facing the authority, which has already cut back on a number of services, and made workers redundant over the past few years.

It also outlines that funding for adult social care will not be possible without a change in the way funding is provided.

It states: “Despite opting to increase council tax by the maximum available rate, the council is required to identify savings to close a funding gap of some £76.5 million by 2019/20. This is in addition to a significant savings program. Achieving the required efficiencies will be extremely challenging.

“In particular, the growth in adult social care and the costs of other statutory responsibilities are not affordable under the current funding model in place.”