Cash-strapped Shropshire Council hasn’t yet received form to apply for exceptional financial support from Government

The local authority – which is reportedly losing around £1 million a week – has requested £71.361 million from the Ministry of Housing, Communities and Local Government (MHCLG).

Latest figures show that the council is now predicting an overspend of £50.746m.

Because its General Fund Balance – also known as unearmarked reserves – stands at £34.280m, it has an unfunded overspend of £16.466m.

Officers and members are currently working under a declared financial emergency, with the ultimate aim being to ensure in-year spend is minimised and income maximised. Discussions have already been held with the MHCLG for EFS, which if granted, would allow the council to be in a legal position.

However, if it is not, it is highly likely that a Section 114 notice will be issued, meaning that Government commissioners will be brought in to effectively run the council.

James Walton, the Section 151 Officer at Shropshire Council who has responsibilty for the authority’s finances, said an application of £21.466m has been identified to support revenue monitoring projections.

The “in-principle” EFS application also includes up to £10m to support funding for transformational activity, and up to £38.805m to write off spending related to the North West Relief Road.

However, speaking at a Transformation and Improvement Overview and Scrutiny meeting on Monday (December 1), Mr Walton said the council has not even received a form to apply for the financial support.

“This year, the chief executive and myself have been on several calls with MHCLG to establish what the process is for this financial year,” said Mr Walton.

“As of yet, that is still unconfirmed what that process will actually be, but the expectation is it will follow previous years – which is an application is made in December. We don’t yet have the form for the application as of yet, but now the Budget and policy statement is out of the way, we would expect to get that hopefully within the next few days.”

Slipping

Mr Walton added that ministers will then consider the request, with an “in-principle” decision expected by the end of February.

“In previous years, they’ve even talked about it potentially slipping into the first week of March,” he said.

“In terms of that process, it has been discussed extensively at the budget forum meeting, which is a members meeting with each of the group leaders.

“In terms of the public message, it’s just to confirm, that is the situation as we see it. We met with the MHCLG a week and a half ago, and they still were unable to confirm what that process would be. But the likelihood is it will follow the process of previous years.”

The chair of the scrutiny meeting, Councillor David Minnery, confirmed that the committee’s working programme will “thoroughly look” into how Shropshire Council got itself into this situation.

“It beggars belief in one sense that, as little as nine months after setting the budget, we’re finding that we’re losing about £1 million a week,” said Councillor Minnery.

“There must be an underline cause to that, which we need to identify to make sure it never happens again.”