Lead Member – Cllr Roger Evans, Portfolio Holder for Finance

Lead Officer – James Walton, Executive Director of Resources

RESOLVED:

A. To note the arrangements being put into place to secure tighter control over all aspects of spending, as set out in this report

B. To note that the Quarter 1 position (as at the end of June) forecasts indicative savings delivery of £34.154m (57%)

C. To direct the Chief Executive to instruct all Officers to urgently take the necessary actions to improve the Quarter 1 forecast of a projected spend over budget of £33.544m (30th June 2025), by year end, predominantly focussing on remaining savings or mitigating actions to be delivered in 2025/26.

D. To consider the impact of the projected forecast on the General Fund Balance and note the risk of further service pressures (requiring additional savings) in the future financial years if financial performance in the current year is not significantly improved.

E. To consider the updated summary position as set out in the Period 4 Monitoring Report also on this agenda.

The Portfolio Holder for Finance presented the report and explained it now reflected the new management structure introduced in the previous year.  He said that the administration had inherited a budget that it had not set; previously set ambitious savings targets had not been achieved and this had resulted in a dangerously low general fund balance and depleted reserves.  As the current year progressed, the general fund balance at 31 March 2026 was currently estimated at just £768,000 which was not acceptable, and there were simply no more reserves available to bolster it.  Work was ongoing to try and find ways to improve this position but the council was now at risk with minimal resilience against any unforeseen variances. 

Discussion included a year on year funding stream cut from central government, the government funding formula which disadvantaged rural counties like Shropshire, the impact of the removal of the Rural Services Delivery Grant and the impact of past decisions, council tax freezes and cuts to grants which had all impacted on the current budget crisis.   The Leader referred to the large number of issues outside of the council’s control and confirmed that a submission had been made to the fairer funding review. 

RESOLVED:

A. To note the arrangements being put into place to secure tighter control over all aspects of spending, as set out in this report

B. To note that the Quarter 1 position (as at the end of June) forecasts indicative savings delivery of £34.154m (57%)

C. To direct the Chief Executive to instruct all Officers to urgently take the necessary actions to improve the Quarter 1 forecast of a projected spend over budget of £33.544m (30th June 2025), by year end, predominantly focussing on remaining savings or mitigating actions to be delivered in 2025/26.

D. To consider the impact of the projected forecast on the General Fund Balance and note the risk of further service pressures (requiring additional savings) in the future financial years if financial performance in the current year is not significantly improved.

E. To consider the updated summary position as set out in the Period 4 Monitoring Report also on this agenda.

To scrutinise the Financial Monitoring report for Quarter 1 and identify issues that may require further investigation by a scrutiny committee

REPORT TO FOLLOW

The S151 Officer, joined by the Portfolio Holder for Finance, presented the reports for both Quarter 1 and Period 4 and explained the difference between quarterly and period reports, noting that quarterly reports provide a more detailed analysis of savings delivery, underspends, and overspends, while period reports offer a monthly overview. The Quarter 1 report included projections based on data from April to June and set the context for the financial year. The Period 4 report highlighted a worsened forecast outturn position when compared to Quarter 1, of £35.169m, indicating what could become an illegal financial position by year-end if not rectified.

Members were advised that the adverse scenario (£102.433m as at Period 4) was significantly worse due to the risk of the Northwest Relief Road (NWRR) scheme cancellation, which would make all costs chargeable to revenue.

Members noted that an independently chaired Improvement Board and three Operations Boards—spend control, workforce review, and technical board—had been set up to rigorously monitor expenditure, workforce decisions, and income generation, aiming to deliver at least £2.5 million in savings and drive short- and long-term financial sustainability.

Members raised concerns about the sustainability of Council finances, the need for concrete savings plans, and the impact of demographic pressures, especially in adult and children’s social care.

The importance of building up reserves for unexpected costs was stressed, with a target of at least £5 million in the general fund balance.

Questions were raised about the status and financial implications of the Northwest Relief Road, with clarification that the project is paused, not cancelled.

The need for realistic, deliverable budgets and robust monitoring was emphasised, with calls for more real-time reporting and transparency.

Members noted the reports.