Shropshire Council in plan to use £19 million of reserves just to balance its books

The plan would only cover slightly more than half of the £37 million hole in the council's forecast budget for 2021/22, with cuts to services likely to be required for the remaining £18 million.

The measure, which would use up nearly half of the council's £40 million reserve fund for the year, would also only allow the council to continue providing the service it currently does, without leaving room for funding any improvements.

Only last week council leader, Councillor Peter Nutting, was part of a delegation which met with the Government to press for an increase in funding.

Following that meeting he outlined how the council's funds are being swallowed up by the continuing increase in adult social care costs, and talked about the impact on the state of the county's roads, which has attracted huge criticism from the public.

The council has also come under fire over some of its spending decisions in the recent days after it emerged it was paying a roads consultant £1,000 a day to tackle the increasing number of potholes in the county, and that it had paid more than £380,000 to consultants working on the proposed refurbishment of its headquarters.

James Walton, the council's finance officer, said they were hoping that the Government's review of the way it funds councils will lead to increased funding.

He said: "The minimum funding gap in 2021/22 is £37 million and we have a Financial Strategy (FS) Reserve of £19 million to deal with some of this gap.

Investment

"We are awaiting the outcome of the Fair Funding Review before we identify what savings proposals would be required to deliver a balanced budget in 2021/22.

"We know that we need investment in a number of services such as highways. So the funding gap is actually wider than £37 million if we want to do anything other than stand still. We estimate additional funding of £50 million is actually required.

"If we work to the funding gap of £37 million and use the FS Reserve of £19 million this would reduce the gap to £18 million. We have £21 million assumed level of earmarked reserves for 2021/22 to provide some short-term resilience should Fair Funding not deliver the outcomes we require."

A report on the council's financial strategy outlines how the long term plan is to bring in funding from commercial activities to balance the books.

It states: "The council has been building up a financial strategy reserve over the last four years in order to provide the council with some resilience to the impact that fair funding may have on the council’s budget and it is anticipated that this will be fully released in 2021/22.

"In the meantime the council will continue to make representations to government that the funding for social care has not been sufficient for a number of years and this needs to be addressed in the funding review.

"The outcome of the fair funding review will give the council a more accurate picture of the funding gap that needs to be addressed, but in the meantime the council is taking a number of steps to deliver a sustainable budget for the council.

"The longer term plans for the council also involve becoming more commercial with the aim of looking for more commercial opportunities for the council in which we can increase the income that the council receives in order to reduce the impact of funding reductions."