07/10/2022 - Permalink

LGA finance review helps confirm budget strategy direction

Related topics: Finance and budget

An independent review of Shropshire Council’s financial approach has confirmed that changes it is making are taking the council in the right financial direction.

During the summer, the council invited a Local Government Association peer challenge team in to review its approach to its budget.

This came as the council has been revising its approach to align with the recently launched Shropshire Plan and the ending of Government money for councils’ response to the pandemic. Furthermore, Shropshire expects to see significant new financial pressures from:-

  • growing demand for its services linked to the pandemic and the cost of living crisis
  • inflation currently double what the council had forecast it to be at the beginning of the year
  • continuing pressures from things such as Shropshire’s growing ageing population, who will have greater social care needs.

Following their visit to Shropshire, the peer team made 14 recommendations, many of which the council had already begun to implement as part of a new medium term financial strategy.

The review team said that the council’s financial position, while precarious – facing a budget gap of up to £34 million, can be corrected with focused and quick action, and that the council has the capacity and tools to do so.

It also said this was needed, because the council cannot rely on lobbying to change Government funding policy to meet the financial challenge, as this is unlikely to succeed.

Instead, their recommendations include many steps that the council is already taking to control the situation, with a strong medium term financial plan, aligned to the Shropshire Plan, delivering robust savings proposals and reducing reliance on reserves and one-off funding to cover one-off budget gaps.

Gwilym Butler, Shropshire Council’s Cabinet member for finance and corporate resources, said:-

“The review gives us an independent assessment of the council’s budget situation by people who know and understand the challenges we face.

“Our position is similar to, and no worse than, many other councils. Yes, we face some very difficult financial challenges – but as the review team points out, this is in our power to control.

“The past two years have been skewed by Government funding to meet the huge amount of extra work this council has completed to respond to the challenges of the pandemic. However, some of the challenges created by the pandemic remain, such as increasing numbers of looked-after children, while we can no longer use one-off funding and our exhausted reserves as temporary ‘sticking plasters’.

“This will require some very tough decisions, being realistic with savings targets that are achievable, all underpinned by a very clear medium-term strategy that spells out the direction we are heading to colleagues, partners and the people of Shropshire.

“We were already putting into action the review’s recommendations, which also confirmed that we were already on the right path.

“I am sure that we are now making the changes needed to take control of our future, which in turn can bring more success in securing the Government support and attracting the investment we need. “

The LGA Finance Peer Challenge report can be seen here.

The LGA peer challenge approach involves a team of experienced officers and councillors spending time with another council as ‘peers’ to provide challenge and share learning.