'Everyone has to understand how difficult the situation is': Shropshire Council to assess 'minimum service provision' as financial crisis looms

The auditors had instructed the cash-strapped authority to assess the costs of providing only the services it is legally required to deliver.

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It comes after the council declared a 'financial emergency' and requested tens of millions of pounds from the Government to prevent issuing a Section 114 notice (the local government equivalent of bankruptcy).

The auditors said the assessment would give the council an understanding of immediate cuts that can be delivered, and would replicate the actions needed if it does issue a Section 114 notice.

During a sober debate councillors heard that services will likely have to be cut, and that the urgency from the auditors had been "unusual" and "not a common occurrence", reflecting the severity of the council's position.

On Friday the council was expected to finalise its submission to the Government requesting tens of millions of pounds in exceptional financial support.

The debate also heard that auditors had found the council was "overly optimistic" under the previous Conservative administration in assessments of its plans to cut costs, with plans repeatedly failing to materialise.

Councillors were also warned that the report had "scared" a number of Shropshire charities, worried about the knock-on impact of council cuts.

Liberal Democrat council leader Heather Kidd said that the aim of the administration would be to protect what it can - and that it had made changes to the way budgets are prepared, to avoid the difficulties generated by previous 'over-optimism' which has left the authority facing a major black hole.

She said: "Much of the problem we have encountered so far with the over-optimism, which really relates to the savings that were in the red-rated section with no plans behind them, will not appear in future budgets and nor will amber.

"That is moving things forward from what we have learned from the past."

Councillor Kidd added that the council leadership want to provide transparency over their decisions, saying: "Everybody has to understand where we are and how difficult a situation we are now in."

During the same meeting the councillors backed a motion to demolish Shirehall, the authority's former headquarters, having heard the building has become "increasingly costly to maintain and operate". That move will be subject to a rapid review before final approval. 

Councillor Kidd continued: "We are beginning to look at some really difficult decisions - one of those will be around Shirehall today - not because we want to do any of these things but because we are forced to do these things unfortunately.

"I would much prefer to have taken this council over four years ago so that the decisions we are now making would have been entirely different, but we are where we are and the most important thing now for all of us is we don't have commissioners come in because commissioners will do something that really does not suit Shropshire."

The leader said some services would face cuts.

She said: "Unfortunately there will be areas that we have to stop. It may be the voluntary sector, it may be things that towns and parishes pick up and do in partnership with us. But that's what it is all about, it is trying to make sure we still deliver for the residents of Shropshire wherever we can, but we are where we are financially and it makes it very, very difficult.

"So there will be things that come forward, but wherever we can there will be mitigations alongside whatever we are deciding, and that is all I can promise."

Earlier the Oswestry Green Party councillor Duncan Kerr said it was "disappointing but not surprising" that the auditors had taken "the unusual step of issuing a statutory recommendation".

He said: "Let us be clear, this is not a common occurrence and it should cause us all to stop and reflect.

"In the report they directly link our financial emergency to our corporate governance failings, putting services to our communities at risk if we cannot approve.

"This is a sober situation; in the past recommendations from external audit have not always led to appropriate action by the council - this cannot be allowed to happen this time."

Kate Halliday, Labour councillor for Shrewsbury's Belle Vue, criticised the historic handling of finances, and said immediate decisions are needed to tackle the scale of the financial problems.

She said: "We are in a very serious position and we absolutely cannot carry on with [what] potentially could be described as sloppy financial procedures and over-optimism in what we can achieve, and we absolutely need to start making decisions right now - not plans, not hopes for government money, we need to start making decisions right now on how we are going to save money."

Opposition Reform leader Councillor Dawn Husemann said the council was paying the multi-million pound price of previous administrations choosing not to raise council tax.

She said: "The main reasons we are in this mess now are due to the loss of what equates to £26m in lost council tax revenue this year alone due to the repeated council tax freezes as a result of the previous administration's actions, plus the loss of the £10m of rural services grant, which is the Government's fault."

The Reform leader also called for a report prepared by consultants PricewaterhouseCoopers (PWC) for the previous administration - which set out millions of pounds of savings to be made - to be shared with councillors.

She said: "In addition to this we have got over £30m of undelivered savings. We are now in a position where we are going to have to borrow millions and pay interest on the borrowing to try and get out of this mess.

"I clarified during a separate meeting that these undelivered savings are those that were identified by the PWC report, a report that we the taxpayers of Shropshire paid millions for."

She added: "I have repeatedly requested sight of this report. After all, we paid for it - why can't we see it? The work was commissioned by the previous administration so we can't blame the current administration for it - so why won't the current administration allow us to see it?

"When I have previously requested sight of this and questioned the savings identified I was told it had been evaluated by Grant Thornton and they had found no issues. Now Grant Thornton's report identifies the same savings as undelivered and I would go as far as to say undeliverable and highlights it as a problem."

Councillor Husemann said she had been told the LGA would assess the paper and report back to the council, but added: "I do not want a sanitised report telling me that they think the millions we spent was value for money, it clearly wasn't due to the fact that £31 million of the savings are undeliverable. I want sight of this report so as to make my own assessment as to whether or not what we got from them was worth the millions we paid them."

Responding later, Councillor Kidd said the report would be shared, but added that it would be in private because of potential commercial sensitivities.

Meanwhile, Shifnal Reform councillor Thomas Clayton issued a plea to consider the impacts of the situation on local charities.

He said: "I have spoken to a number of charities in my local area since May and this report has come back and it has scared them.

"So the first of the statutory requirements has requested that a minimum viable service provision be identified and find out what that costing will be. That has scared them for the hills.

"I have had multiple charities contact me asking me for details regarding what that would sound like, and what that would be of impact to them. They have asked me very simply, how would they be able to project what their charity would need to, should services, whether that be direct or indirect, no longer be available to these charities?

"I ask please, if the council would be able to, could they please provide the information, the expected minimal viable service and what the potential costs would be for charities if these services were to stop, so they can project what they need to do to continue providing these charitable services to their local people?"