The Financial Monitoring Period 4 2025/26 has been published today (4 September 2025) which covers the first four months of this financial year. The report shows that at the end of period 4, if no alterations are made the council will have overspent its budget by the end of this fiscal year by just under £900,000.
This is not permitted to happen and would need the council to issue what is called a Section 114 notice prior to the end of March. This would result in Government taking action to ensure spending was reduced by, if needed appointing commissioners to take effective control of the council.
To reduce the probability of this happening the period 4 financial report which provides details the situation at the end of July is asking Shropshire Council’s Cabinet to declare a financial emergency at their meeting next week (Wednesday 10 September 2025). This is due in response to the present unexpected increase in providing the services the council at present provides.
The latest budget figures within report show that the council is projecting an overspend of £35.169m by the end of this financial year (31 March 2026). This is £889,000 above what the present financial resources that the council has.
This figure includes both this year’s projected increases in costs to deliver the essential services and the savings that the previous Conservative Administration during recent years have failed to achieve.
It should be noted that this figure is a projected one, and with immediate action the present cabinet and officers of this council are confident that issuing a Section 114 notice can be avoided.
Several controls to limit spending are in place across the whole organisation and this work will continue alongside further steps to secure future sustainability.
Councillor Heather Kidd, Shropshire Council’s Leader, said:
“We are forecasting spending more money than is coming in and, understandably this can’t continue.
“For me, the alternative is not an option. If we do not produce a balanced budget by March we will be forced – by law – to deal with a Section 114 notice. It means that we will effectively pass over control of the whole council to government-appointed commissioners. Cuts will be made. Services will be dramatically reduced. And it will be many years before the council can properly retake control of both our finances and our services. We must not let this happen.
“We have measures already in place to reduce our spend and substantial savings have already been achieved, but we must now do even more. As a new Administration, this budget is something we have inherited.
“As a council, we must all move quickly to challenge every pound and stop all non-essential spend. If we do this, I’m confident that we can balance our budget by the end of this financial year. And at the same time we are working through plans to become a sustainable council, providing a better future for us all, but it won’t be easy.”
Shropshire Council is one of many councils across the country facing a financial emergency mainly due to a year-on-year decrease in Government funding and soaring costs particularly in social care which accounts for nearly 80% of the council’s budget.
Heather added:
“It’s no surprise that the lack of Government funding is contributing hugely to our financial challenge. Year after year, this funding fails to account for additional cost of delivering essential services over a large, sparsely populated area.
“We will of course continue to lobby the government for fairer funding allocations that genuinely reflect the needs and challenges of all authorities, including in rural areas with complex challenges such as Shropshire, but we are also determined to reduce our spend to enable us to balance our budget and avoid the issuing of a Section 114.”
The council has also already started to engage with town and parish councils across the county, recently receiving over 130 responses to calls for information. Following on from this it is likely to soon sign a Memorandum of Understanding (MOUs) with two town councils, Shifnal Town Council and Shrewsbury Town Council setting out how they going to work more closely together in the future.
Councillor Alex Wagner, Shropshire Council’s deputy leader, said:
“We have been really humbled by the response we’ve had to our recent call for information from our town and parish councils.
“They know their communities best and we’re keen to continue to explore ways we can work together better to enable them to shape their places and enable them to protect the services that really matter, especially if we can no longer afford them.
“Our MOUs with Shifnal Town Council and Shrewsbury Town Council is just the start and we’re excited to work with even more in the near future.”
The Financial Monitoring Period 4 2025/26 can be found on the council’s website here.
This report will also be considered by the council’s Transformation and Improvement Overview and Scrutiny Committee on 8 September and then Cabinet on 10 September 2025.
