Bankruptcy avoided: Shropshire Council gets £190 million 'exceptional financial support' loan from Government
Shropshire Council will avoid the looming spectre of 'bankruptcy' after the Government confirmed £190 million in emergency funding.
The council's application for exceptional financial support (EFS) has been granted, in news which will be met with a huge sigh of relief at Guildhall.
The authority has been teetering on the edge of issuing a section 114 notice - the council equivalent of declaring bankruptcy - in recent months.
If that materialised the council would have been taken over by Government-appointed commissioners, with spending decisions only taken on the basis of what is legally required.
Such a move would have put a host of services under threat, along with other groups across the county which rely on council funding.
But the council's application to the Government for EFS has now been approved - understood to be £71.4m for 2025/26, and £121m for 2026/27.
The money comes in the form of a loan which must be paid back at the public loans board rate.
The funding also means the council now has the option to fully cancel the North West Relief Road, which has been in stasis for months amid concerns about the financial implications of pulling the plug on the controversial project.
Liberal Democrat council leader Heather Kidd welcomed the news, saying: "It is the start of putting the council right so I am very pleased."
The council will be expected to use the money to ensure its services can be run to a budget.
It is also likely to see Shropshire Council area residents seeing their council tax going up by an unprecedented nine per cent.
In a message to council staff and residents Councillor Kidd added: "I’m pleased to share with you the welcome news that the council has been awarded exceptional financial support (EFS) from the Government for this year and next.
"This represents agreement that the council may borrow the money we’ve asked for to propose a balanced budget for 2026/27.
"This proposed budget will be presented to council on Thursday (February 26) for their consideration and agreement.
"Receiving EFS will require us to receive an independent review of the council’s financial position and governance arrangements.
"This will include a detailed look at the progress we are making with our plans to achieve financial sustainability over the coming years including all the actions covered in our Improvement Plan. We won’t be able to rely on EFS indefinitely which is why we need to continue to improve and become sustainable.
"Of course, any money that we borrow from the Government will need to be paid back over time. Therefore, we will continue to work hard to ensure that we only borrow what we absolutely need.
"Our conversations with central Government continue and recognise we are not the only council to apply for EFS, and that in the longer-term sustainable Government funding that better reflects our rural demographics is critical."
