'It is not safe' - Shropshire Council's £37m budget black hole could see reserves cut down to just £1.5m

The council's head of finance, James Walton, delivered an update on the perilous budget situation to the authority's transformation and improvement scrutiny committee earlier today - Monday, January 20.

The authority has outlined the precarious nature of its finances for some months - with ambitions to make £62.5m of cuts in the 2024/25 budget.

Addressing the committee Mr Walton said the current estimate was that the council is heading for an overspend of £37.31m at the end of the financial year.

The finance chief stressed that the figure was subject to variance, with a lower estimate of £32.31m and an upper prediction of £60.21m.

Mr Walton said that were the council to finish the year £37.31m overbudget then it would have to use reserves to plug the gap.

He told the committee that such a move would leave the council with reserves of just £1.5m.

He said: "That is a difficult situation and significantly below what you would be expecting to see."

Mr Walton was pressed on the reasons for the council not making the planned savings - which were set out in its budget for the year.

He said: "There is a combination of reasons - one example is if I talk about the staff savings and staff reduction.

"So of £90m in total, £27m related to staff. Of that there is about £9m which is delivered and there is £18m still to be achieved. Of the £18m we are reasonably confident that there is probably another £4-5m that does not show in the figures."

Mr Walton said that while some voluntary redundancy had been agreed, some workers would not be leaving until the next financial year, meaning the savings do not show in the budget.

But he added that "in some cases there are some savings that have not been delivered quickly enough".

The meeting also heard that the council was still looking at future ways to generate a significant amount of money from its car parks - but that the 'income strip' model being considered had been abandoned.

It was initially hoped that proposals for the authority's car parks could generate as much as £34m.

Meanwhile, Councillor Gwilym Butler, the authority's cabinet member responsible for finance, said that the council should be praised for setting aside reserves that would cover the overspend.

He said: "What I would say is thank god we put that money into reserves and we have put that money into reserves every year for the last four years because I know there is slippage."

He added: "I think a lot of the criticism is war mongering or scare mongering.

"History is proving what we have done in the past was right."

Council leader, Councillor Lezley Picton said that despite its difficulties the authority was not looking to government to solve its problems.

She said: "There are a number - a significant amount of councils who have gone 'we cannot do this, we will ask for emergency funding'. We are not one of those - we have said 'we will solve these problems'."

She added that the administration would not be 'chucking in the towel' over the issues.

Reacting to the latest budget picture, Councillor Roger Evans, joint leader of the Liberal Democrat opposition, and a member of the committee, questioned why a number of savings had not materialised.

He said the council was going to finish the year with £1.5m in the reserves pot, adding: "One has to ask why."

He continued: "No council of this size should ever have reserves of that low value, it is not safe."

He added: "We should be getting better not deteriorating."