Shropshire Council's financial hole isn't as deep as feared - report

The authority overspent by nearly £8million in 2023/24, but Shirehall finance bosses say savings in the final quarter of the year lead to an improvement on an earlier forecast of £14.5m.

A report to be heard by cabinet next week will also show the council delivered just over 80 per cent of its budget savings for the past year, cutting around £41m against a target of £52m.

The authority cites increased demand in both adults and children's social services as adding to a tough financial outlook for county finances, but says it has been able to implement measures such as assistive technology to ease cost pressures.

The council says it’s doing “as well as can be expected” ahead of what it says will be a highly challenging year, with a further £62m of budget savings identified for this year.

“The year just ended was, financially, exceptionally challenging for the council,” read the report from head of finance James Walton.

“The budget agreed in March 2023 set the highest savings target in the Council’s history and it became clear early in the year that significant demand pressures (emerging after the budget position was finalised) were persisting into the year.

“The previous quarterly reports have consistently set out this position, with substantial social care demand pressures and ongoing inflationary pressures juxtaposed with the most success in savings delivery yet seen.

“Despite ongoing pressures set out in the budget for the new financial year in the February 2024 Council papers, the results from the last financial year place the council as well as can be expected to tackle what will undoubtedly be another highly challenging year requiring significant savings, careful management of demand pressures and reduction in overall spending.”

Despite an overspend of around £8.3m in the council’s People directorate, a group of services which includes both children's and adults social care, the council was able to claw-back around £4m in savings from its corporate budgets, which include non-operational items such as pensions and borrowing costs.

A “sharp” increase in children’s residential placements led to a £6.8m overspend in the Children’s Services budget, along with extra spending on agency staff cover. In adult social care the report noted around £15m of extra spending relating to increased costs of care being delivered in people’s homes.

Around £20m was transferred from general reserves to meet extra costs in these areas, leaving the council’s general fund reserve at around £8.2m at the end of the year, around 50 per cent below the recommended minimum level.

The cabinet will also hear of improved reporting procedures which it says will help the authority meet its spending target for this year, where it will need to find £62m of cost savings in order to reduce its overall spend to around £709m.