Shropshire Council’s finances improve but ‘more action needed’
Shropshire Council is almost on track to balance its books this financial year, its finance chief has said.
A report to go before the authority’s cabinet next week predicts an overspend of £838,000 by April, based on the position at the end of quarter three.
This would be a 0.15 per cent overspend on the council’s total budget of £575.5 million in 2020/21, and is within the range “that can be seen as reasonable given the size and complexity of the council’s budget”, the report says.
The current position is an improvement on the £2.8m overspend predicted half way through the year, and better than the same point last year when a £1.5m overspend was predicted.
The report, by finance director James Walton, says the figures reflect action taken to cut costs across all services, but that “more action is needed to bring the budget back into balance”.
He also warns the overspend could be more than currently predicted if expected savings are not delivered by the end of the year.
This year’s budget, initially signed off in February 2020, was reassessed following the onset of the pandemic and an updated version was approved by councillors in July, including £18.7m in savings.
The quarter three monitoring report says £6.9m worth of savings is currently rated ‘red’, meaning it is not expected to be achieved. A further £1.6m is rated ‘amber’ and £10.2m is rated ‘green’.
The report says: “Managers have provided assurance that plans are in place to deliver the savings that have been categorised as amber, however as evidence of the delivery has not yet been identified, there is still a risk that these savings could impact on the outturn position for 2020/21.
“As the year progresses, these amber savings should gradually turn to green as the evidence becomes available.”
The report says non-delivery of the amber-rated savings would result in an overspend of £2.415m this year, which would leave the council’s reserves at an “unsustainable level”.
The report adds that the council is not expecting the Covid pandemic to have any impact on its finances this year, with all costs and lost income covered by government grants. It had previously warned it could be £10 million short.
The report will be discussed by cabinet at a meeting on Monday.
