Shropshire Council cuts among worst in the country as authority's finances sit on a knife edge

Analysis of the council's perilous financial position, which has been the subject of concern for some months, shows that the authority is planning to make the most savings of any council in England per person – £191 for each person.

The figures come from questioning councils across England – with 131 out of 153 responding.

The data shows that out of the 131 authorities to respond Shropshire Council is making the most savings in the country as a proportion of its net revenue budget – with a total of £62m of cuts.

The analysis comes after the council's own latest financial reports predict it being a staggering £37m over budget by the end of the year.

If that position materialises the authority will need to wipe out nearly the entirety of is reserves, which amount to £38m, just to cover the gap.

That would leave the council one crisis from being able to pay day-to-day running costs, a situation which would trigger effective bankruptcy.

Although the figures make for stark reading, the severity of the situation facing the council's finances has been known for some time.

The council's own administration has warned about the "acutely difficult" budget, while opposition councillors have previously suggested the authority is sleepwalking towards bankruptcy.

The increasing urgency of the situation has been seen in cuts to services this year, the introduction of additional charges for existing services, as well as plans to lose as many as 540 full time workers.

Responding to the latest figures, the leader of Shropshire Council, Lezley Picton, said the authority has "no choice" but to make significant cuts, adding that "people in Shropshire will notice this more and more".

She said: "Like many other councils across the UK, we are facing an urgent and unprecedented financial challenge. Demand for many of our services has risen, especially since the pandemic, and the cost of providing these services has also increased. Local authorities are large and complex organisations and in Shropshire a savings target of £62.5m represents a reduction in our planned revenue spending from £824m to £761m, a reduction of 7.5 per cent this year. Still large, but more representative of our position.

“More than 75 per cent of our net budget is spent on social care. The number of children looked after in Shropshire has increased by 85 per cent since 2020 and care placements have become more expensive.

“Shropshire is a rural, sparsely-populated county with complex care needs, which adds to the financial pressure.

“At this critical point, we are taking very difficult decisions to overcome the challenge we face in this financial year and we know there will be an impact for our communities and our colleagues.

“We are introducing a new charge for garden waste collections and have reviewed all our services to decide what we must reduce, pause and stop altogether. Many of these plans are now well advanced and people in Shropshire will notice this more and more as we reduce and remove services, and those that we must provide we do so at a minimum level required. These are decisions we do not want to make but we now have no choice.

“We will be a smaller council overall and expect our workforce to reduce by around 540 full-time equivalent posts to make the savings we have to make. We need to prioritise services for people who need us most and find new ways to provide all services as efficiently as we can such as through digital tools – which can be better and cheaper.

“Our Medium-Term Financial Strategy includes savings for this financial year of £62.5m, and this includes a contribution to our general fund reserves, a prudent decision to increase our resilience and lay the foundations for a more sustainable future.”

Councillor Roger Evans, the joint leader of the Liberal Democrats, said the council's administration had missed opportunities to close the gap over the years.

He said a failure to take opportunities to raise council tax means – because of the cumulative way annual increases work – that the authority has lost out on a potential £20m extra a year.

Councillor Evans said the administrations own decisions – including its £53m purchase of Shrewsbury shopping centres, with the value of the assets later plummeting, had contributed to its woes.

He said more effort should have been made to reduce costs and raise money in recent years.

He said: "To use as an excuse the increase in social care cost as the only reason for the desperate straits the council is in is wrong and is totally misleading."

As other council's face similar issues Councillor Louise Gittins, chair of the Local Government Association (LGA), warned that the risk of financial failure across local government is “becoming systematic.

She called on the new Labour government to provide councils with financial stability and funding reform, including the introduction of multi-year funding settlements.

Local Government Minister Jim McMahon said: “This government inherited a crisis in local government and there’s no shying away from the scale.

“These deep-rooted problems won’t be fixed overnight, but we are committed to fixing the foundations, reforming and rebuilding the sector from the ground up to begin to get ahead of the underlying pressures for the benefit of councils and local communities.”