Shropshire Council deeply disappointed as Government confirms unfair funding settlement

Shropshire Council has expressed its strong disappointment following yesterday’s (9 February 2026) confirmation of the Government’s funding settlement for local authorities. 

The initial announcement, made just before Christmas, was followed by a consultation period in which Shropshire Council submitted a detailed response outlining serious concerns about the fairness of the proposed settlement—particularly for rural areas like Shropshire. Despite this, the final decision published yesterday offers no meaningful improvement. 

For several months, the council has been clear about the mounting pressures it faces.  

How Shropshire Council is funded 

Shropshire Councils’ funding comes from Government grants and locally generated income; mainly Council Tax, Business Rates but also fees and charges. 

With this funding, the council must provide essential services such as adult and children’s social care, waste collection and highways maintenance, but it also offers optional services like leisure and theatres. 

In Shropshire, the pressure on finances has grown because more people need support, especially older residents with increasingly complex needs. The proportion of older people in the county is much higher than the national average (26.4% in Shropshire compared with 18.7% in England in 2024). The gap in funding is being increased further by price increases for delivering services in a very rural and high-sparsity place, and periods of very high inflation, well above average inflation for many local authority services, such as residential homes for children. 

Impact of yesterday’s announcement 

The final settlement confirms that Shropshire Council will receive £4.3 million less in 2026/27 than previously planned in its draft Medium Term Financial Plan (MTFP) published in October 2025. 

This reduction will also affect the amount the council will need to borrow both this year and next — on top of existing financial pressures driven by rising demand and unavoidable inflationary increases. 

While ministers have also given permission for the council to increase Council Tax by up to 4%, in addition to the 4.99% it is ordinarily capped at, it continues to have limited options for generating the income it needs. Any decision to increase Council Tax would need to be made by Full Council later this month as part of the council’s budget setting process. 

Without a fairer funding model that recognises the cost of delivering services in large, rural counties, Shropshire will continue to be placed at a substantial disadvantage. 

Councillor Heather Kidd, Leader of Shropshire Council, said: 

“The Government has let Shropshire down again with this funding settlement, despite repeated promises to address the long‑standing gap between rural authorities and our urban counterparts. This latest reduction in government support deepens the structural deficit we are already facing and places even greater pressure on our ability to deliver essential services. 

“We are now £4.3 million worse off in next year than projected in October. Ministers have ignored the significantly higher cost of delivering services in a large rural county and have removed funding for remoteness factor. The consequences for rural services will be stark. 

“Yesterday we were given permission by the Government to increase Council Tax by a up to 4%, although this is a decision which will be considered and made by Full Council later this month. 

“If this were to be approved, an 8.99% increase would generate an extra £8.8million in much‑needed income. However, even with this additional revenue, the financial challenges we face remain significant. Inflation, rising costs, and growing demand—particularly within social care—continue to increase year on year. Council Tax alone cannot keep pace with these pressures, and ongoing reductions in government funding widen the deficit further. 

“In reality, this leaves us with no choice but to borrow up to  £121 million from the Government as part of our Exceptional Financial Support (EFS) ask, significantly increasing our long‑term debt. 

“With limited ability to increase our Core Spending Power and more statutory duties being passed to councils without the funding to deliver them, borrowing remains the only option to bridge the immediate gap.”