Shropshire Council’s financial crisis deepens as deficit hits £35 million

The latest Financial Monitoring report (Period 5, 2025/26), published ahead of a Cabinet meeting next Wednesday, 15 October, reveals the council is now forecasting it will exceed its available resources by £1.25 million. This is an increase of roughly £300,000 since the previous monitoring period.

Section 114 Warning Looms

The council, which declared a financial emergency last month, is now facing the very real possibility of having to issue a Section 114 notice before 31 March 2026.

A Section 114 notice is the last resort for a local authority and would immediately halt all non-essential spending. Critically, it would trigger government intervention, potentially leading to the appointment of commissioners to take control of the council and enforce spending reductions.

The projected £35.531 million deficit is attributed to a combination of rising costs for essential services—particularly social care, which accounts for nearly 75% of the budget—and unachieved savings targets set by the previous administration.

Confidence in Avoidance

Despite the stark figures, the current Cabinet and council officers remain confident that issuing a Section 114 notice can be avoided through continued action. The council has already implemented several controls to limit spending across the organisation.

Councillor Roger Evans, Cabinet member for finance, stressed the gravity of the situation:

“We are continuing to forecast spending more money than is coming in. Although we are slightly comforted by the fact that this isn’t a huge amount more than we were predicting at the end of period 4, it’s something that we need to get under control now.”

Councillor Evans highlighted the inherited challenges: “We inherited this budget from the previous Conservative administration and the savings they failed to make. We have been working hard since May to put in place a number of measures to stop all non-essential spend and reduce essential spend.”

Borrowing and Fairer Funding

The council is preparing for "difficult decisions" in the coming weeks and is already in talks with the Ministry of Housing, Communities and Local Government (MHCLG) to seek Exceptional Financial Support (EFS). This would allow the council to borrow money to maintain services into the 2026/27 financial year.

Councillor Evans remains cautiously optimistic: “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... but it won’t be easy.”

He also echoed concerns shared by many rural authorities, blaming the crisis partly on a "lack of Government funding" which "fails to account for additional cost of delivering essential services over a large, sparsely populated area.”

The council vows to continue lobbying for fairer funding allocations that genuinely reflect the needs of rural authorities while remaining determined to reduce spending and avoid the issuing of the Section 114 notice.