Shropshire Council is now forecasting an overspend of more than £50 million for the current financial year. The latest figures show the council’s financial position has worsened again, moving further into what officials describe as a serious financial emergency.
A new report prepared for both the Overview and Scrutiny Committee and the Cabinet confirms the projected overspend has reached £50.746 million. This is an increase of £3.677 million since the last update only weeks ago.
With the council’s General Fund Balance at £34.280 million, the authority is now facing an unfunded gap of £16.466 million.
Shropshire Council operating under a financial emergency
Council officers and elected members are working under a declared financial emergency. Departments have been instructed to cut spending immediately and increase income wherever possible.
The council has already submitted an in-principle request to the Ministry of Housing, Communities and Local Government for exceptional financial support. If approved, this would allow the council to legally balance its budget.
If the Government refuses the request, the council is expected to issue a Section 114 notice. This would trigger Government intervention and the appointment of commissioners to take control of financial decision-making.
Why the budget shortfall is so complex
Director of Resources James Walton says the financial position is difficult to manage because several major pressures overlap. These include transformation projects funded by capital receipts and uncertainty surrounding the future of the North West Relief Road and its Government funding.
To stabilise the situation, senior officers have introduced a three-part plan:
Protect a minimum reserve
Maintain at least £5 million in the General Fund by year end to ensure resilience against unexpected financial shocks.
Create a contingency fund
Use £5.478 million from earmarked reserves to manage identified risks and reduce pressure on the general fund.
Continue negotiations with Government
Seek exceptional financial support for 2025 and future years.
Up to £75 million in support may be required
The council has identified a need for £21.466 million to support the current revenue position. It is also seeking up to £10 million for transformation work and up to £38.805 million to write off spending connected to the North West Relief Road.
This brings the potential total request to £71.361 million. Further discussions with Government suggest the final figure may reach £75 million when all financial reviews are completed.
A formal application will be submitted next month once the Government sets out the process.
Council pauses routine financial reporting to focus on next year’s budget
Shropshire Council will not produce a period eight financial monitoring report. Finance officers are instead concentrating on building the 2026-27 budget and the updated medium-term financial strategy, which must reflect the worsening financial outlook.
