To receive the draft financial strategy as its being developed and provide any feedback accordingly.

REPORT TO FOLLOW

The Executive Director of Resources introduced the report emphasising that the Shropshire Plan aimed to align resources with the Council’s Healthy Organisation priority. 

The provisional Local Government Financial Settlement (LGFS) for 2025/26 had included several key changes and uncertainties, impacting Shropshire’s budget planning.  Changes in funding policies would leave the council significantly worse off than would otherwise be the case.  There would be a need to find further savings of nearly £22.8m to balance the budget in  2025/26 due to a reduction in Core Spending Power resulting from these changes.  This would be on top of the £37.7m in outstanding savings as at period 8.  The Council would need to identify further savings to balance the budget while managing significant demand pressures in Social Care and service delivery over a large rural area.

The unexpected removal of the Rural Services Delivery Grant and other adjustments in funding policies disproportionately affected rural councils with low population density and dispersed small pockets of localised deprivation like Shropshire.  The main measure for council finances, Core Spending Power (CSP), shows a 3.1% increase for Shropshire, this being below previous minimum increase growth floor of 4%. This was the third lowest increase in the country, with only Rutland and Herefordshire receiving less. This represented a reduction in actual government funding and the impact would be passed to local residents and council taxpayers.

The Assistant Director of Finance and Technology also drew attention to distinct stages in local government funding, the first being the provisional statement with the final settlement expected within the few weeks.  It was possible for change to be made within this period, for example, reinstating the 4% minimum funding floor would be of low overall cost to the government.  Lobbying was also underway around the Rural Services Delivery Grant which had appeared to have been withdrawn without the usual process of consultation or impact assessment.   It was hoped that there might be some changes made prior to finalisation of the settlement,  

The consultation around future funding of local government for 2026/27 and beyond, was expected to conclude around September time and further changes to the pattern of funding for all councils were expected.  He cautioned that some of the elements that had been removed to the detriment of Shropshire and other rural councils might, if not addressed before then, become firmly established at that point. It was absolutely essential for the council, officers and councillors to convince the government of the differences in providing services over a large geographical area, by illustration Shropshire, covering 1200m², was twice the area of all 33 London Boroughs combined (600m²). 

Members were encouraged to view the robust response the Council Rural Services Network had made to the government, expressing deep concern over the allocation of government funding which did not take into account the unique challenges faced by communities in rural areas.  

Officers went on to respond to questions in relation to: information set out in the tables within the report; the public budget consultation; and planned demand management measures in social care.  The Assistant Director of Finance and Technology explained measures in place to help manage and mitigate demand and associated costs, particularly in areas like adult social care.

In relation to recommendation 3.2 of the report, a suggestion was made that a clear graphical explanation of the situation in terms of service delivery be added to represent the council’s position.  Members heard that the consultation response mechanism did not accept pictures or charts but a letter being put together on the Leader’s behalf would include graphics prepared by colleagues to clearly illustrate the issues. 

It was agreed to amend Recommendation 2 to make reference to the recommendation of the committee to include graphic representation of the situation. 

The Committee agreed to:

·       Note the revised estimates for 2025/26 expenditure and resources;

·       Note the revised estimated resources for 2025/26 and the overall outcome for this Council;

·       To consider opportunities to advocate for an improved position in the financial settlement, and include clear pictorial and graphic explanations when representing the position;

·       To note the uncertainty affecting estimates for 2026/27 and the period 2026-2030.