Shropshire Council seeks financial support from Government

The Liberal Democrat-led council has paused all non-essential spending as it scrambles to restore stability following the discovery of a major in-year budget shortfall.

The move follows a "deep dive" into the authority's accounts, revealing a situation "even more critical than previously understood," exacerbated by soaring social care costs and what the new leadership terms years of "mismanagement and broken savings promises" by the Conservatives.

Cllr Heather Kidd, Leader of Shropshire Council, did not mince words, stating: “The scale of the financial issues we have inherited from the Conservatives is extremely serious. The former Conservative administration repeatedly promised reform and financial discipline but it never materialised, leaving us with a budget that simply doesn’t add up.”

She added that many of the savings targets set by the previous administration were "never achievable," and that the council had been left without any plans to meet them. Crucially, the Liberal Democrats, who took control in May’s local elections, have uncovered that the Conservatives had been dangerously relying on the council's limited reserve fund – the General Fund Balance – which has now been exhausted.

The council has been grappling with a worsening financial position for months, declaring a financial emergency in September. The latest review suggests that without "alterations," the council could overspend by £50 million by March 2026. While the council holds £34 million in its General Fund Balance to help this year, it is not enough to cover the looming deficit.

Failure to resolve the overspending urgently could lead to a 'Section 114 Report,' which effectively bans new non-essential spending and risks the Government taking control of the council via appointed Commissioners.

Cllr Kidd said the new administration is "determined to be honest about the scale of the challenge and to take decisive action," with a priority to "protect vital frontline services and to rebuild trust."

Councillor Roger Evans, Cabinet member for finance, echoed the concerns, noting that years of overspending under the previous administration had depleted all reserves. "We all, councillors and staff have been working hard since May to put in place a number of measures to stop all non-essential spend, reduce essential spend, increase income, and try to deliver the needed \textsterling60 million of savings that were in the budget we inherited."

He confirmed that the council is now seeking urgent financial support to continue delivering services until March 2026, as well as a longer-term funding package to enable a three-year transformation plan aimed at achieving sustainability.

Both councillors pointed to a national issue of minimal year-on-year Government funding failing to meet soaring social care costs, which account for nearly 75% of Shropshire's budget.

"It’s no surprise that the lack of Government funding is contributing hugely to our financial challenge," Cllr Evans said, promising to lobby for fairer funding for rural areas. However, he stressed the administration’s commitment to internal reforms: "We are also determined to reduce our spend to enable us to balance our budget and avoid the issuing of a Section 114 if at all possible.”

Councillor Rosemary Dartnall, Leader of the Labour Group, said:

“Everyone knows about Shropshire Council’s deepening financial crisis. It’s been spoken of for a number of years. This week’s revelation is the most shocking report yet.

“Month-on-month the council’s finances edge closer to bankruptcy but this week’s news records a major lurch into danger for the authority. The previous Conservative administration came to an end in May – they left the council in a disastrous financial state with a budget for the current year that was clearly not achievable. Missing budgeted savings was the hallmark of the Conservatives’ last few years in office and those overspends carry forward to the next year. The debacle of the mismanaged North West Relief Road project has added a huge burden of many millions to a failing council.

“The Lib Dem administration, elected in May, declared a financial emergency in September. At this month’s Cabinet meeting I was robustly assured this declaration had real meaning and that we would see clear improvement in the accounts: the end September numbers would predict a better year end position, I was assured. But this is not at all the case.

“At the August accounting period, the council expected to be £1.25m overspent, but according to yesterday’s news, the position has ballooned: the council now expects to be almost £16m in the red by March.

“Since this financial crisis began, now three years ago, it has been clear the council needs to make deep change to be a sustainable organisation based on the services we all depend on and the funding that is available. Council staff have suffered years of job threat and despite this constant pressure they have worked tirelessly to keep public services running but there has been no substantial change. We all know there will be tough decisions to make and we urge the Lib Dems to move quickly to do this work.

“I give credit to the administration for bringing in the LGA (Local Government Authority) in July to assess the council. The LGA recommended an Improvement Board be established to make the change that’s needed: this starts in November. We hope the board moves quickly to request sufficient exceptional financial support from government. Labour Group councillors are of course ready to work alongside the administration and all parties to avoid bankruptcy and keep our services running.”

The full financial monitoring report, detailing the current budget position up to the end of September, is set to be published on 10 November ahead of a Cabinet meeting on 19 November. The new administration is implementing an action plan, including an Improvement Board, based on recommendations from an independent review by the Local Government Association (LGA) conducted in July.