Worries over unsustainable savings gap at Shropshire Council
The council needs to find an extra £14m to balance the books.
Early indications at Shropshire Council show delivery of budget cuts are in danger of falling behind a record £62million target.
The authority’s cabinet and scrutiny panels will look at the first monthly report into progress against its knife-edge finances next week, which shows the council has already made just over £9.6m of savings cuts, with plans in place for a further £38.4m over the rest of the year.
However the paper by council head of finance James Walton states the council still needs to identify around £14m of further savings to avoid an “unsustainable” financial position.
It’s the first time the council has produced a monitoring report this early in the financial year, with a more detailed update expected at the end of the first quarter.
“Combined, there is already a potential level of delivery of £48.087m (76.9%) against the savings target of £62.480m. This is undoubtedly a good start but still leaves a gap in excess of £14m, which is not sustainable,” he said.
“This exceptionally early insight provides Cabinet with assurance that actions are being taken and demonstrates effective systems are in place, reflected in this relatively positive start to the year.
“Its fundamental aim is to provide an early insight into whether the unprecedented actions being undertaken by the Council this year have the potential to secure financial survival, initially, and then a path to financial sustainability.”
The report says that work on “resizing” the council in order to meet its proposed new target structure had continued in May, with initial work focussed on a voluntary redundancy scheme for staff, a review of agency spend and a partial hiring freeze.
One of the council’s key budgetary pressure points in adult social care is predicted to run around £4.7m over budget, although around £4.5m is planned to be saved by changes to the way the service is delivered.
Of greater concern may be children’s services, which are projected to be around £4.8m over budget due to a £1.9m projected overspend on foster care, with just under £1.5m overspend predicted on agency staff to fill vacant posts.
Current projections also show the council’s general reserves, which were topped up by just over £30m at the start of the financial year, will again need to be raided in order to balance the budget unless the savings gap can be closed – with the early outlook indicating the authority’s coffers could once again go below the £10m mark.
“While representing progress against the balances seen in 2023 and in 2024, use of reserves at that level is not a sustainable outcome,” added Mr Walton.
“Several substantial risks will continue to be faced during the coming year, and the available £38m must be protected to mitigate those risks rather than offsetting under-delivery of agreed savings.”
Gwilym Butler, Shropshire Council’s Cabinet member for finance, corporate resources and communities, said:
“The outturn report clearly shows an exceptional savings delivery for the 2023/24 financial year, more than the council has ever achieved before, and is the result of robust reporting, a clear plan and hard work by officers. We have also increased our reserves, although this is still far below what is needed for a council of our size and there is absolutely no room for error in our plans to deliver even more savings this year.
“We face a huge challenge, mainly from the effects of rising demand for our services, particularly social care. There will be very difficult decisions we have never wanted to make and we know there will be an impact for our communities and staff. Some of these are already out for consultation and more will follow soon.
“However, the systems we have put in place for monthly reporting mean we are better placed than ever to track our progress against this very challenging outlook.”
“The outturn report clearly shows an exceptional savings delivery for the 2023/24 financial year, more than the council has ever achieved before, and is the result of robust reporting, a clear plan and hard work by officers. We have also increased our reserves, although this is still far below what is needed for a council of our size and there is absolutely no room for error in our plans to deliver even more savings this year.
“We face a huge challenge, mainly from the effects of rising demand for our services, particularly social care. There will be very difficult decisions we have never wanted to make and we know there will be an impact for our communities and staff. Some of these are already out for consultation and more will follow soon.
The report will be discussed at the council’s scrutiny committee on Monday (3 June), and again by cabinet on Wednesday (5 June).