Shropshire Council facing a difficult financial year as it dips into reserves

Councillor Gwilym Butler, portfolio holder for finance, fears that next year the council won’t have enough money to fulfil statutory demand.

While presenting a quarterly financial year report to the council’s cabinet he had a warning for central government about next year.

He said: “Next year it’s not about an overspend, it’s about a shortage of budget for demand - there’s a big difference.

“We’re not overspending because we want to, we actually haven’t got enough money to deal with the statutory demand.

“That’s the message we’ve got to give to our MPs and it’s vitally important that we do that.”

The council has seen its net budget grow by £20m during the 2023/24 term and targeted £51.4m in spending reductions.

Budget pressures continue to increase with adult and children’s social care resulting in £22m extra needing to be found.

A monitoring report was considered by the council’s cabinet on Wednesday which said it has ‘identified’ £38m of savings to be delivered by March 2024.

It added that £20.6m of this year’s savings had been delivered by the end of September 2023.

The monitoring report added that ‘one-off resources’ will be identified to offset pressure this financial year ‘while longer term sustainable demand management plans are in place’.

This will include the use of earmarked reserves and a review of grant balances received to meet the extra pressure.

Liberal Democrats group leader Roger Evans questioned the savings and said that the financial projections for next year ‘showed an overspend’ of £26m.

“This year we may be able to use all the earmarked reserves and the general reserves but for next year the situation looks exceedingly bleak,” added Councillor Evans.

In response, Councillor Butler said: “In any financial reporting these are projections and they will change. Admittedly when we did the initial savings that was the easy fruit to a certain extent.

“As we go through this year it will become harder to get the other savings out of the organisation. Let’s not forget that we’ve saved £38m which is probably more savings this organisation has actually made over the previous five or six years.

“It’s an immense achievement by staff to keep us financially sustainable this year. The use of earmarked reserves for the demand management of social care and children’s (services) is going to be vital in the short term.

“This is looking at what may happen, I hope the situation improves and we don’t have to do it. We have to put a plan in place to cover everything that may happen.

“I’m content that we will get to the 90-95 per cent of the £51m (savings for 2023/24).”

Councillor Julia Buckley, Labour group leader, asked why for the second consecutive year there was a ‘huge overspend’ on children’s agency social workers.

She said last year the council overspent £1.3m on the staff which has risen to £1.624m this financial year.

Councillor Buckley asked the council to start employing social workers directly and stop ‘wasting money’ paying agencies.

She added that it was an ‘assumption’ that the council will deliver a further £8.2m in savings this financial year and ‘find somewhere’ £20.5m of short-term funding – of which she understood £7m had so far been identified.

In reply, council leader Lezley Picton said that there was a wider shortage of social workers and they were in competition with Telford & Wrekin Council who matched the increased payment rates.