Shropshire Council's Cabinet asked to declare 'financial emergency' as it grapples with projected overspend
Shropshire Council's Cabinet is being asked to declare a financial emergency at its meeting next week as it grapples with a projected £35.169 million overspend by the end of the financial year.
The move comes in response to a newly published financial report covering the first four months of the fiscal year, which reveals the council is currently on track to exceed its budget by nearly £900,000.
The report, which details the financial situation as of the end of July, highlights an unexpected surge in the cost of delivering essential services. This overspend, if left unaddressed, would force the council to issue a Section 114 notice before the end of March 2026. Such an action would be unprecedented for Shropshire and would likely lead to government intervention, including the potential appointment of commissioners to take control of the council's finances.
A council spokesperson expressed confidence that a Section 114 notice can be avoided through "immediate and severe controls" on spending. These measures are being implemented across the entire organisation, with the goal of not only addressing the current deficit but also ensuring future financial sustainability. The projected overspend figure includes both this year's increased costs and savings that the previous Conservative administration failed to achieve in recent years.
The current cabinet and council officers are confident that with decisive action, they can successfully navigate the next seven months and prevent the need for government oversight. The declaration of a financial emergency is a critical step in this effort, signalling the urgency of the situation and the commitment to bringing spending back in line with the budget.
Councillor Heather Kidd, Shropshire Council’s Leader, said:
“We are forecasting spending more money than is coming in and, understandably this can’t continue.
“For me, the alternative is not an option. If we do not produce a balanced budget by March we will be forced – by law – to deal with a Section 114 notice. It means that we will effectively pass over control of the whole council to government-appointed commissioners. Cuts will be made. Services will be dramatically reduced. And it will be many years before the council can properly retake control of both our finances and our services. We must not let this happen.
“We have measures already in place to reduce our spend and substantial savings have already been achieved, but we must now do even more. As a new Administration, this budget is something we have inherited.
“As a council, we must all move quickly to challenge every pound and stop all non-essential spend. If we do this, I’m confident that we can balance our budget by the end of this financial year. And at the same time we are working through plans to become a sustainable council, providing a better future for us all, but it won’t be easy.”
Shropshire Council is one of many councils across the country facing a financial emergency mainly due to a year-on-year decrease in Government funding and soaring costs particularly in social care which accounts for nearly 80% of the council’s budget.
Heather added:
“It’s no surprise that the lack of Government funding is contributing hugely to our financial challenge. Year after year, this funding fails to account for additional cost of delivering essential services over a large, sparsely populated area.
“We will of course continue to lobby the government for fairer funding allocations that genuinely reflect the needs and challenges of all authorities, including in rural areas with complex challenges such as Shropshire, but we are also determined to reduce our spend to enable us to balance our budget and avoid the issuing of a Section 114.”
The council has also already started to engage with town and parish councils across the county, recently receiving over 130 responses to calls for information. Following on from this it is likely to soon sign a Memorandum of Understanding (MOUs) with two town councils, Shifnal Town Council and Shrewsbury Town Council setting out how they going to work more closely together in the future.
Councillor Alex Wagner, Shropshire Council’s deputy leader, said:
“We have been really humbled by the response we’ve had to our recent call for information from our town and parish councils.
“They know their communities best and we’re keen to continue to explore ways we can work together better to enable them to shape their places and enable them to protect the services that really matter, especially if we can no longer afford them.
“Our MOUs with Shifnal Town Council and Shrewsbury Town Council is just the start and we’re excited to work with even more in the near future.”
This report will also be considered by the council’s Transformation and Improvement Overview and Scrutiny Committee on 8 September and then Cabinet on 10 September 2025.
