Analysis: Why Shropshire Council has to take the chance offered by £190 million Government loans
Following months of fretting there will be major relief at Guildhall after Shropshire Council was given permission to borrow nearly £200 million to stave off the threat of bankruptcy.
For the Liberal Democrat administration the council's perilous financial situation has dominated proceedings since they swept to election success last May.
Taking over an authority which had been run by Shropshire's Conservatives since 2005, the new leadership has been staring down the barrel of bankruptcy.
After declaring a financial emergency in the months following taking control, the administration has been fighting a host of financial fires - including the chaotic wreckage of the North West Relief Road project.
In a bid to solve its monetary misery the council had requested what is known as "exceptional financial support" (EFS) from the Government.
Today it was confirmed that the Government has agreed to the request, which comes after it granted permission for the council to raise council tax by an unprecedented nine per cent earlier this month.
The numbers included in the EFS agreement are eye-watering, and it is important to make clear that the money comes in the form of a loan that must be paid back by the people of Shropshire - not a freebie, get-out-of-jail grant.
The council had made two requests: for £71.4m of funding to resolve its budget problems for this financial year, 2025/26, and another £121m for 2026/27.
Both of those requests have been approved in what are the largest cumulative bailout loans handed out in this round of government support.
Part of the 2025/26 request is to cover the shortfall left over from money already spent on the North West Relief Road. The council has spoken previously of its desire to cancel the project, but it has held off while uncertainty remains over who would be left on the hook for the £39m already spent on the scheme.
The remainder of the loan will be used to plug gaps in the budget and help the council transform services, to transition to a model where it operates within its budget.
How Shropshire Council got here
The reasons for the financial issues are multi-faceted and date back many years - some are of its own making, and others are not.
One of the significant features has been decisions to repeatedly keep council tax low. While this move has doubtless been welcomed by a majority of council residents over the past 20 years, there has been a long-term impact.
By avoiding bigger rises the council finds itself in a situation where it is millions of pounds behind where it would have been - all money that now needs to be found every year from other sources.
Some of that will be balanced out if the council proceeds with the expected nine per cent rise in council tax, but it will be a bitter pill for residents to swallow in one bite.
As previously discussed in the Shropshire Star, there are a host of other issues.
The council has been behind the times on its efforts for income generation, failing to adopt initiatives others have embraced - Telford & Wrekin Council's solar farm is one example.
It has also completely failed to meet its own savings targets, with years of planned cuts instead being met by borrowing from reserves as the financial year closed in.
Other problems are expensive gambles which included spending on projects such as Shrewsbury's £51m shopping centres - valued at just £12m in 2021 - costly indecision over its former Shirehall base, and the ongoing burden of the North West Relief Road - likely to have cost the council millions with not a metre of tarmac to show for it.
Meanwhile the authority has also faced a combination of insurmountable demographic and geographical issues - compounded by ever-diminishing levels of support from central government.
Recent years have seen major increases in the demand for adult and children's social care, a reflection of societal change which accounts for a huge proportion of its budget. It is also an increase that shows no signs of slowing down.
The difficulties of providing those services over such a large, rural county also mean they are more expensive for Shropshire, another major issue affecting council budgets.
The situation was compounded earlier this year when the Government announced its financial settlements for councils, with Shropshire set to lose millions in the coming years while neighbouring Telford & Wrekin will see its share rise.
Regardless of the challenges, Shropshire Council has been fortunate enough to be given an opportunity to correct course. It allows the council time and breathing space to make the changes required - but it has to take the chance.
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