Lead Member – Cllr Roger Evans, Portfolio Holder for Finance

Lead Officer – James Walton, Executive Director (S151 Officer)

REPORT TO FOLLOW

RESOLVED:

3.1 That Cabinet discuss the emerging pressures for the coming year and in the context of the new direction for Shropshire Council work alongside officers to identify and agree the decisions necessary to achieve a legal budget for 2026/27 and a balanced financial position across the medium term.

3.2. That Cabinet requires Officers to continue work to; • Reduce all non-essential spend for 2025/26 and review identified pressures • Prepare savings options for the coming year, to secure a balanced budget for approval by Council in February 2026. • Work with MHCLG to actively pursue options for Exceptional Financial Support over the MTFS Period

The Portfolio Holder for Finance presented the first MTFS under the new administration, covering the latest forecast for 2025/26, an early draft for 2026/27, and indicative figures for subsequent years.   

Despite current financial measures, a savings shortfall of approximately £26 million remained, with further mitigating actions to be reflected in the December update. A potential funding gap of £81.7 million for the next financial year was reported, alongside a cumulative gap of £139 million over five years. Exceptional Financial Support from government was expected to be required, and discussions were ongoing. The Portfolio Holder highlighted depleted reserves and worsening projections compared to the previous year.

Significant pressures on adult and children’s social care were identified as major cost drivers, with growth assumptions of 6.5% for adults and 12% for children in 2026/27. The robustness of these projections were discussed and the importance of detailed analysis to ensure efficiency and accuracy. During discussion, members noted demographic challenges, complexity of social care cases, and high referral rates, particularly in domestic abuse cases. Initiatives such as the Stepping Stones project aimed to reduce demand, but progress would take time.  Responding to a question, the Portfolio Holder for Social Care reported that benchmarking showed Shropshire’s placement costs remain mid to low compared to neighbouring authorities, and the Local Government Association would support transformation in adult social care.

The Leader emphasised the need for transparency and early communication of difficult decisions to residents. Consultations on the budget would begin in December, with urgent proposals brought forward to inform towns and parishes as they prepared precepts for January and February. A Budget Forum would precede formal meetings, and the aim to become an enabling authority, allowing local councils to take on services where appropriate was emphasised. Members stressed the importance of giving residents time to plan for the impact of these decisions.

The Portfolio Holder noted that Shropshire was not alone in facing these challenges, with many shire authorities in similar positions. Lobbying through the County Councils Network (CCN) and support from the LGA were ongoing to secure government assistance and address the financial emergency. The MTFS sets out the scale of the challenge and the urgent need for collaborative action to deliver a sustainable financial position.

RESOLVED:

3.1 That Cabinet discuss the emerging pressures for the coming year and in the context of the new direction for Shropshire Council work alongside officers to identify and agree the decisions necessary to achieve a legal budget for 2026/27 and a balanced financial position across the medium term.

3.2. That Cabinet requires Officers to continue work to; • Reduce all non-essential spend for 2025/26 and review identified pressures • Prepare savings options for the coming year, to secure a balanced budget for approval by Council in February 2026. • Work with MHCLG to actively pursue options for Exceptional Financial Support over the MTFS Period