Council facing £8 million overspend

Shropshire Council is facing an overspend of almost £8 million in the current financial year.

The council’s cabinet will be told next week that based on quarter one performance, it is looking at a £7.995 million overspend.

It has prompted James Walton, director of finance, to warn: “Management action across all areas of the council is now required to attempt to bring the budget back into balance, as far as possible.”

Mr Walton added: “Without management action, there is a risk that savings proposals currently rated as ‘amber’ may be undelivered, which would have the effect of increasing any underlying overspend by £3.665m.”

He said that the figures are projected from the first three months of the financial year and will become more accurate going forward, but warned some identified ‘red’ savings (the most vital) are at danger of not being delivered.

He said: “ As at quarter one, evidence suggests that of the £18.490m of proposals to be delivered in 2019/20, £8.988m are rated as ‘green’ – with a high degree of certainty of being delivered.

“The quarter one monitoring position suggests that £5.837m of the £18.490m savings planned are categorised as red, and further work is required within service areas to ensure that the total value of savings proposals is fully deliverable within the financial year.

“Furthermore, additional ongoing service pressures totalling a net value of £5.279m are already being highlighted, which service areas will need to address alongside delivering their savings.”

He added: “A number of red-rated savings are not deliverable in the current year due to timing but are deliverable in the medium term.

“This presents a short-term issue rather than an unachievable saving, with the potential to still deliver an element of the saving within this financial year.

“This includes the following larger savings totalling £3.079m: public health recommissioning across adults, children’s and public health (£1.064m); new development dividend (£1.025m);  digital transformation (£0.990m).

“Service pressures relating to home to school transport (£0.971m) and children’s services staffing and agency costs (£0.520m) are being reviewed and an update will be provided later in the financial year.”

He added: “Cabinet have taken decisions to remove approximately £1.3m savings from the 2019/20 financial strategy: review of waste services (£0.700m); review of bus subsidies (£0.285m); passenger transport commissioning savings in learning and skills (£0.364m);  CCTV monitoring service (£0.225m).

“If management action is identified to deal with the key issues identified, this has the potential to reduce the projected overspend from £7.955m to £1.827m which would bring the overspend down to a more reasonable level.”