Government grants 'exceptional' £26.9m support for Shropshire Council

Earlier this month the cash-strapped authority revealed that it had applied to the government for what is called a 'capitalisation direction'.

The move allows the Conservative-run council to sell assets, such as buildings, and use the money for revenue costs.

The council has said the money will be used to pay for the 'transformation' of the authority - including paying for redundancies as it cuts its workforce.

The funding takes the form of a loan, which will be paid back by the council.

The authority has faced significant difficulties in its bid to deliver a balanced budget this year - making cuts of around £51.9m, around 20 per cent of its net budget, and with the prospect of bankruptcy looming large.

Speaking to the Shropshire Star earlier this week, the council's chief finance officer James Walton said that the council's solvency for 2024/25 was not dependant on the government approving the capitalisation request.

He said there were a number of measures the council would take to balance its books by March 31 if the funding had not been agreed. Some of those measures could have included temporarily halting some of the authority's services to save money.

Shropshire Council's Conservative leader, Lezley Picton has welcomed the announcement, while her opposition Labour leader, Councillor Rosemary Dartnall said the move was illustrative of the way the authority has been managed.

Councillor Picton said: "I am pleased that the Government have accepted our request for Exceptional Financial Support which will allow us to cover the costs of our Transformation Programme.

"To be clear these funds are not to cover our day-to-day expenditure.

"Whilst we could have covered these costs if our application had not been accepted this allows us to invest now to make the long-term savings we need to make, as we become the modern, efficient and sustainable council we need to be for our communities."

Councillor Dartnall said: "Today the Government announced a package of Exceptional Financial Support for councils under financial stress.

"As everyone is aware, Conservative-run Shropshire Council has been on the brink of financial crisis for a number of years. The spectre of council bankruptcy remains real. Shropshire Council applied to Government for permission to capitalise revenue costs it cannot otherwise afford to pay."

Councillor Dartnall also criticised Councillor Picton for claiming 'we have done it' - in relation to setting a balanced budget for this year.

She said: "Yesterday the Conservative Leader of Shropshire Council claimed success for her administration in achieving a balanced budget.

"A confusing statement that residents will not understand. It bears no relation to reality.

"She has led the council through years of extreme crisis that were entirely predictable, making cuts to the services we all depend on, introducing a Green Waste tax, and overspending the budget year on year.

"After fourteen years of Coalition and Conservative Government Austerity cutting funding to councils like Shropshire there is no doubt the Conservatives nationally and locally have failed Salopians.

"Thanks to the new Labour Government stepping in, Shropshire Council will be able to carry on with the current plan to survive bankruptcy. We all see signs of decline everyday – potholes, unkempt streets and neighbourhoods: If this is success I can’t imagine what failure would look like."

 Responding to the criticism Councillor Picton accused her opponents of 'petty political point scoring' and 'toy town economics'.

She said: "As we move towards the elections on 1st May, I would expect nothing less from the opposition parties but to make sweeping statements and inaccurate claims.

"The difference is, the current administration has had to deal with reality as opposed to toy town economics.

"Instead of their constant carping and telling us what they don't like, the people of Shropshire are yet to hear or see any viable alternatives.

"Regardless of results in May the financial situation at Shropshire Council requires solutions, not petty political point scoring."