'Urgent intervention' needed to improve Shropshire Council's finances after latest damning spending forecast
Shropshire Council is being told that “urgent intervention” is needed to improve its financial position with the latest forecast saying it will be £33.5 million over budget.
A 46-page report has been compiled by executive director James Walton which will first go to the Transformation and Improvement Overview and Scrutiny Committee on Monday (September 8) and then cabinet two days later.
It covers the period from April 1 to June 30 and is the first quarterly year report of 2025/26. The central forecast indicates anticipated expenditure of £33.544m over budget by the end of the financial year, with a “favourable” estimation being £27.344m and an “adverse” one being £98.689m.
The council's general reserves, referred to as the General Fund Balance (GFB), meanwhile, is £34.280m. That is the amount of unrestricted money the council has to make uneven cash flows or cover unforeseen expenses or emergencies.
However, after accounting for high-risk cost pressures including the increase in the demand for social care (as set out in the Medium Term Financial Strategy) and the estimated spending above budget (as projected at quarter 1), the balance for the end of 2025/26 is just £736,000.
Mr Walton says the position indicated by the current estimated spending to the end of the year would require the full extent of the GFB to be applied to maintain balance between income and expenditure within the year.
“This is a high-risk position, projected early in the year, and a balance of £5m is considered the minimum acceptable GFB to hold,” said Mr Walton.
“Urgent intervention is required through all portfolio areas to secure improvements in the financial position – seeking out and correcting all areas where planned expenditure can be reduced, removed, or deferred.
“Simply – the current anticipated level of expenditure needs to be significantly reduced, and at great pace.”
The revenue budget is funded by £478m of income including specific government grants and retained local taxation receipts.
The council has an overall savings target of £59.876m for 2025/26. This is made up of new savings (£7.7m), demand mitigation proposals (£10.9m), and savings yet to be delivered and carried forward from 2024/25 (£41.3m).
Nearly half of the savings target is in corporate (£28.581m), followed by care and wellbeing (£8.913m), and children and young people (£8.218m).
“Significant management action has and continues to be undertaken to ensure the council’s financial survival,” said Mr Walton.
“While all reports provide the financial implications of decisions being taken, this may change as officers review the overall financial situation and make decisions, where necessary in conjunction with cabinet members, aligned to financial survivability.”
In March, the council’s senior leadership team was instructed to deliver significant savings and enable the authority to be reconfigured into a more sustainable model for the future.
The move removed the previous directorates in a bid to remove “silo” working and established eight new functional areas that, with executive directors and the chief executive would form a new leadership board.
The capital receipt projections for this financial year includes £3.875m for the continuing voluntary redundancy programme, £6.7m for transformation projects and £3m for previously committed spend with the council’s strategy transformation partner, PwC.
“The capital budget for 2025/26 is continuously being monitored and changed to reflect the nature of capital projects which can be profiled for delivery over several years,” said Mr Walton.
“In Quarter 1 there has been a net budget decrease of £19.736m for 2025/26, compared to the original budget reported in the 2025/26 Budget Book in February 2025.
“Virements in Quarter 1 arose primarily due to temporary removal of the North West Relief Road (NWRR) scheme from the Capital Programme until the future of the scheme has been determined.”
