Year end overspend reduces by £1.5m despite inflation and service pressures
The final figures for the latest financial year show that Shropshire Council’s overspend reduced by £1.5m to finish the financial year 2022/23 at £8.5m.
The reduction in overspend reflects that the Council’s plan to reduce this is starting to have an effect despite a very challenging climate from rising demand for services including looked after children and the highest rate of inflation in almost 40 years.
For most of the financial year inflation has run at around 10%. However, when the Council set its budget the day before Russia’s invasion of Ukraine, it had forecast inflation to be around 3% for 2022/23.
In November, Shropshire Council expected its overspend to be almost £11m, but this has come down because of the adoption of a medium term financial strategy and robust and more accurate financial reporting.
The Council is also delivering on its Shropshire Plan, a key goal of which is to reduce demand for services particular care through early intervention, preventing issues for adults and children that require care and support from becoming more serious.
However a report to cabinet states that the overall position for the Council remains very challenging and in this financial year it needs to reduce its spend by £50m to stay within budget.
Its reserves, money used to help meet the costs of emergencies such as flooding or weather related events, is half the minimum level it should have.
A report to the Council’s cabinet says that among the biggest reasons behind the overspend are demand for social care continuing to go up, rising energy costs, the cost of living crisis creating more demand for services and the removal of Government funding for COVID-19.
Cllr Gwilym Butler, Shropshire Council’s cabinet lead for finance said:-
“The year outturn shows we are moving in the right direction. Without the effects of inflation, we would now be looking at ending the year with a balanced budget.
“However, the overall situation remains extremely challenging, and we must press on and reduce our spending by £51m this year alone, the most this organisation has ever achieved.
“However the foundations are now there for us to once and for all tackle the structural budget gap that has affected Shropshire Council for many years.
“The outturn position shouldn’t be considered in isolation, for example our Collection Fund returned a significant surplus. Plus we have better financial reporting, comprehensive savings plans and greater awareness among our staff than ever. Through the Shropshire Plan we have a very clear direction to ensure that wherever possible we reduce demand through early intervention.
“Yes we still have a very long way to go, but we are now seeing our plans and hard work beginning to bear some fruit.”