'We can't wait that long': Shropshire Council wants decision 'in principle' on Government financial support this year
Shropshire Council wants a decision “in principle” from the Government on whether Westminster will help bail it out, with the authority now predicting an overspend of £47.1 million.
The Liberal Democrat adminstration declared a financial emergency in September and says it will do all it can to avoid a Section 114 notice being issued (the local government equivalent of declaring bankruptcy).
A “deep dive” has been carried out into the authority’s finances, which saw service directors and senior professionals going through the budget “line by line” to ensure there was nothing too optimistic.
However, with the council only having £34.3m in its reserves, it means it is in an illegal position to the tune of just under £13m.
The authority has therefore asked the Ministry of Housing, Communities and Local Government (MHCLG) if it is willing, in principle, to provide £15 million in exceptional financial support and bring it back into a legal position.
“The way the MCHLG work, you put an application in December and they tell you at the end of February,” said Section 151 officer James Walton, who is legally responsible for the proper administration of the council’s finances.
“Well, that is not really good enough for us because we’re talking about in-year support and we can’t really wait that long.
“That’s why we’ve said ‘give us an in-principle decision’. It’s taken them over two weeks to just reply to our initial letter to say they’ve received it. So it’s going to take a while, but nevertheless we’re going to chase them with another letter over the next couple of days and confirm why we need this support.
“People keep talking about Section 114 notices and the threat of bankruptcy.
“External audit is also quite rightly looking at our position. If we were able to go to all those stakeholders and say ‘we’ve got some form of response from the Government’, that just takes a lot of the pressure away and we can go back to the day job. But the longer we have to wait, I am asked questions.”
The MCHLG has confirmed it is aware of Shropshire Council’s position and is continuing to discuss it with the authority.
A spokesperson said: “We’re turning the tide on decades of underfunding in councils in England so we can give people the high quality public services they deserve.
“We’ve made £69 billion available this year for councils, including £353.2m for Shropshire Council, an increase in core spending power of 3.8 per cent compared to the previous year, and will go further by fixing an outdated funding system and introducing multi-year finance settlements.”
The council has confirmed it won’t set the 2026/27 budget until February, though a cabinet meeting on December 3 will set the parameters for the budget.
“What is important is we have a balanced budget for next year,” said Mr Walton.
“The approach we have taken previously is very quick, short-term, sharp cuts that have been made in all sorts of areas. Lots of those were not particularly visible but have taken lots of money out of service areas to bring the budget back into balance.
“We are not looking to do that for the next financial year, and will have a different approach. And that’s why the exceptional financial support [request] is not just for current year – it’s also part of a strategy going forward for future years.
“There will definitely be a a whole series of savings, but they will be considered and will be balanced. It will be a series of savings that will be much more deliverable.”
