Warning as Shropshire council faces £5 million overspend

The Financial Monitoring Report, which is due to go to the cabinet meeting next week, says the latest figures indicate an overspend of £5.061 million by the end of March 2018.

But the report adds that if action is taken, including a spending freeze, the overspend could be reduced to £428,000, which could be considered a "reasonable variance".

The news comes after it was revealed that the council needs to make £36 million of savings in the next financial year.

The funding gap is then expected the grow by £6 million a year, so by financial year 2022/23 the gap would be about £59 million.

James Walton, head of finance, governance and assurance at Shropshire Council, spoke at the council's performance management scrutiny committee meeting at Shirehall on Wednesday.

He said: "The difference between the resources we will have and the expenditure will be £36 million. Previous estimates were £24 million so that's grown.

"The plan was to fund the current financial year and the next by the using of one off grants from Government and using reserves.

"The gap has grown and we're currently projecting we will overspend by £5 million this financial year, it's not going to balance."

Mr Walton added: "The next stage is what do we do about the next financial year.

"We've said that there are two positive ways in which we can deal with that, one negative and a fourth option which is using reserves in the short term.

"Innovation and raising income are the positive ways and cutting services is the negative option.

"If the two positive ways are enough to close the funding gap in a short time that's what we would do but the reality is these things are not secure.

"What we don't want to do is a whole scale reduction across the council and stopping everything that we do. The reality is there are some things we're not going to be able to do in the short term and the long term.

"We haven't yet identified what these things are.

"It will go to cabinet on December 6 and then go out to consultation."

Councillor Hannah Fraser said the financial situation was "a bit of a worry".

She said: "I know this money has got to be found from somewhere but it seems to me that schools are no longer supported in the way that they were.

"Are we going to see educational standards taking a dive as we won't see schools supported by the council anymore? That's a bit of a worry."

Shropshire Council's cabinet will discuss the £5 million overspend and action which could be taken at its meeting on Wednesday.