Shropshire Council to use £9 million of reserves to tackle budget black hole
More than £9 million of reserves will be used in Shropshire Council’s bid to address its growing financial black hole.
The authority’s cabinet will consider its latest financial strategy next week, which sets out a plan to tackle a predicted shortfall of £59,270,364 by 2022/23.
The report confirms the use of millions of pounds of reserves, cuts to a number of services, redundancies, but also plans to use the council’s commercial and economic growth strategies to make more money for the authority – including around £10m from its investment in property such as Shrewsbury’s shopping centres.
The plan also sets out a proposal which would see council tax increase to the maximum allowed by law, 5.99 per cent – up from 3.99 per cent.
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All in all the plans include £42m of savings, which would ensure a balanced budget for the next two financial years.
But the council has admitted more work will need to be done for the following period, with the authority still predicted to be £23.9m short in 2022/23.
The main reasons outlined for the shortfall are a drop in the amount of government grants and significant increases in the costs of adult social care and children’s services.
A report from the council’s chief finance officer James Walton says that “innovation” will save the council £21m over the next five years with £3m coming from using a smaller number of buildings and “making those we do use more energy efficient and delivered on a more commercial basis”.
The council’s digital transformation project, which is introducing new computer systems to the authority, is predicted to save £10m. The paper also outlines a number of measures where the council believes it can raise money, including £10.7m from investment in assets such as Shrewsbury’s shopping centres and other property.
More than £4m is predicted to come from cuts to services, including £556,000 from the home to school transport budget. The report also re-iterates a previously agreed £5m cut in spending on highways.
The authority had been hoping for changes in the funding formula for councils from government but the plan has been delayed, leading to the council having to draw up its strategy without them.
In his report Mr Walton said: “Information on the Government’s Fair Funding Proposals have not as yet been forthcoming and, in fact, implementation has been delayed by at least twelve months to 2020/21.
“It is not possible, therefore, to calculate the impact of these changes on Shropshire Council. The option to create a definitive long-term financial strategy is consequently not available.
“The council can, however, develop a plan for a sustainable budget based on the information currently available. With a focus on innovation and raising income, the need to cut services beyond the levels already proposed to deliver a balanced budget remains an unquantifiable risk.
“Furthermore, a focus on income generation, for example, brings with it further risks such as security and longevity of income streams, whereas service cuts, by their very nature, represent a highly secure approach to reducing costs.”
