Council budget overspend reduces further

Shropshire Council has reduced its budget overspend for the last financial year by more than 40%: however, it ended the year with a deficit of £2.5 million.

This reflects many of the pressures hitting the council’s budget, including the effects of rising inflation, growing demand for children’s social care and the difficulty in recruiting staff to support this area, as well as reduced income for its commercial investments and services.

In spite of these, the £2.5m overspend is £1.8m less than had previously been forecast, and is at the lowest end of the council’s so-called “financial control corridor” due to steps taken to further reduce this as much as possible, underlining how the council continues to gain more effective control of its budget.

The council says that it has strong budget control plans to actively manage its budget position to give greater control of its finances and help reduce overspends further, as well as tackle its structural budget deficit gap.

For example, in children’ social care, a statutory responsibility for the council, it is now training up apprentice social workers, the first group of which will qualify in January 2023, and help reduce the need for much more costly agency staff to cover vacancies.

A report to the council’s Cabinet shows that, in 2021/22, the council received £7.6m in grants to cover the costs of the pandemic, which has been used to cover most additional costs resulting from this; although social care costs for both adults and children are expected to continue to grow, linked to pressures created by the pandemic.

Gwilym Butler, Shropshire Council’s Cabinet member for finance and corporate resources, said: “It is of course disappointing that the council has finished the financial year over budget, but there are very clear and understandable reasons as to why this happened.

“It is compounded by the fact that it costs more to provide many of our services because Shropshire is a very large sparsely populated county, particularly at a time when things such as fuel costs are increasing so rapidly, and that we are not fairly funded to reflect this.

“We can, however, see that we are continuing to move in the right direction and have strong plans in place to continue to manage our financial position; although, like all businesses, we must keep this under close review to take account of emerging and unforeseen pressures such as the highest inflation rate for 40 years.

“We are now working to look at how we can further address these and will be presenting initial ideas for this soon.

“We are confident that, while we face a very challenging financial situation, we are continuing to move towards a much more sustainable position budget, with greater control of our future.”

The 2021/22 overspend will be carried forward and, as part of the financial control corridor approach, this lowest value had already been factored into spending plans, meaning there will be no impact on the 2022/23 budget. A report on the council’s year end budget position will be discussed by Cabinet at its meeting next week (Wednesday 6 July 2022).