Shropshire Council 'faces £69 million pound funding void' without government action
Shropshire Council could be faced with a funding void of £69 million within five years unless it gets more money from the government in a promised overhaul of how local authorities are financed.
New forecasts have revealed pressures on the council’s budget are set to intensify, with the soaring cost of social care and current “outdated” limitations on how council tax is set.
The council predicts it will spend £604 million in 2021/22, exceeding the £564 million anticipated funding, leaving a shortfall of £40 million.
The figures are set out in the council’s new medium term financial strategy, which covers the next five financial years up to 2026. The report says the funding gap is expected to grow by about £7 million each year.
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The government has indicated that one-off grants handed out this year will be repeated next year, which would go some way to closing the gap in 2021/22 – though the report says £16.4 million may also need to be used from reserves.
Any grants will be confirmed in mid-December when the government announces its provisional local government funding settlement for next year.
Finance chief James Walton has now warned that the only way the funding gap will be narrowed in future years is if the government’s ‘fair funding’ review substantially increases the grant the council gets.
The outcome of the review is scheduled to come into effect in the 2022/23 financial year, having been delayed as a result of the pandemic, and will change the way government funding to councils is calculated.
Difficult
The report says: “It is difficult at this stage to predict with any accuracy what the implications will be for Shropshire Council.”
But it is hoped it will “accurately reflect the costs and future annual growth in costs of (predominantly) delivering social care services, resolving the structural funding gap within Shropshire”.
The report says: “At the present time the pressure on service costs, particularly the demographic impact of adults’ and children’s social care is unsustainable within Shropshire.
“The current funding mechanism, one that limits council tax increases to less than two per cent, one that attempts to link social care growth costs and complexity to one-off grants calculated using outdated and inequitable ‘Relative Needs’ models and to a precept on the number of Band D households in the geographic area, is inappropriate and unsustainable.
“Without the fundamental change promised by fair funding, Shropshire Council simply does not have the tools in the box to resolve this issue.”
Mr Walton says it is also vital that the government continues to provide funding to cover the council’s future coronavirus-related expenditure and income loss, in line with its promise at the onset of the pandemic.
The report says: “In Shropshire, throughout 2020/21 it can be evidenced that that pledge has fundamentally been met so far; with the estimated direct costs of Covid-19 reasonably matched to funding made available.
“Put simply, it is essential that this approach continues.
“Shropshire Council does not have resources available to manage Covid-19 measures locally within its own resources.”
The report will be discussed by the council’s cabinet next Monday.
