Neighbouring council sympathetic over Shropshire's financial plight
A neighbouring council says it is sympathetic about the financial crisis engulfing Shropshire, with a state of emergency set to be declared.
A “financial emergency” is set to be declared on Wednesday (September 10) when cabinet meets to discuss the current situation.
Shropshire Council has two accounts: the revenue account which is supplied by day-to-day income, and the capital account which can be used to invest and borrow for large projects.
Latest figures show that the authority is projecting an overspend of £35.169 million by the end of the 2025/26 financial year. That is £889,000 above its present financial resources.
Legally, this is not allowed, so unless immediate action is taken to balance the books, a section 114 notice will be served, which freezes all but essential spending.
Local authorities cannot actually go “bankrupt” in the way that a company or an individual can. Instead, the council's finance officer can issue a section 114 notice.
Once a finance officer issues a section 114 notice, the authority may not incur new spending unless the finance officer permits it to do so.
Like Shropshire, Herefordshire also has the challenge of meeting the increasing demand of social care in a rural county, while trying to balance the books.
A spokesperson for Herefordshire Council said: “We are sorry to hear about the financial situation at Shropshire Council – they are a valued neighbour, an important partner and play a key role in the economic development of the region. We recognise the distinct challenges that rural counties like ours face and are sympathetic to their position.
“Despite continuing demand and cost pressures, Herefordshire Council is working to deliver services within its approved budget in 2025/26. We have robust controls over expenditure and continue to explore ways to manage demand for services.
“Alongside monitoring spend in year, we are also reviewing expenditure requirements to deliver services in future years in the context of planned reform of funding from central government.
“In addition to nationally recognised cost pressures in service delivery, there are significant additional costs in delivering services in a sparsely populated, rural county including the delivery of home care services, collecting and disposing of waste and providing transport for residents across our communities. The council hopes that the allocation of funding to Herefordshire through the Fair Funding Review recognises these additional challenges.”
