Run on Shropshire Council's financial reserves ‘calamitous’ says opposition

But the council’s finance portfolio holder, Councillor Gwilym Butler, says the authority is “in control” and “has a plan” to manage the council’s finances, after achieving unprecedented levels of cost savings this year.

Earlier this week it was revealed that the authority plans to dip into its general fund to plug a gap of up to £14 million in its current year budget, leaving around £2m in the bank to cover potential emergencies.

The council says the general fund will be topped back up to recommended levels of around £30m when the budget rolls over in April, and hopes to make extra cost savings between now and the end of the financial year to reduce any risk of a potential cash crunch.

Liberal Democrat group leader Roger Evans told a council cabinet meeting that the figures, spelled out in a quarterly monitoring report, showed the council’s budget plan wasn’t working.

“This report is concerning. At the end of quarter three there’s an overspend of £14.5m against general reserves of £16m which actually at the end of quarter three leaves the council with its general fund with just £1.63m in it,” he said.

“The highways saving in the report is just under £1m, that’s work which was not carried out on the highways but which was budgeted for.

“If that money had been spent the reserves at quarter three would have been down in the thousands of pounds. That is concerning and it is a risk this council is facing.

“If there is a plan, was the plan expected to bring reserves down to this level? It’s a calamitous level.”

Councillor Butler paid tribute to council officers who had worked to deliver cost savings in the past financial year – and would try to find more savings before the end of March.

The council has achieved around £40m worth of budget savings in the current financial year, and has put forward a further £62m of cuts in next year’s budget.

The authority says its proposals will “reduce the overall size and scope of the council” and adds that demand for services now “significantly outstrips” available resources.

“We are seeing spending pressures of £28m in demand-led areas which is featured in the report, and we are actually putting one-off set reserves of £20.5m to reduce that,” said Councillor Butler.

“There is an overall forecast for the year of an overspend of £14.5m budget pressure, I’m working very hard with my finance officers next to me to get that down and I’m fully aware of the pressures that has on the general fund balance and the reserves.

“But I’m also exceedingly confident in the fact that as part of our plan moving forward, on the first of April those reserves will be repopulated up to about £30m. It’s difficult times but we’re in control and we have a plan to move it forward.”

The council’s budget proposals will be debated by full council next week.